Budget 2015: Jaitley fails to fire equities; Sensex yo-yos and ends marginally up

The Sensex today maintained a volatile trading session on the Budget day plunging as soon as Finance Minister Arun Jaitley finished reading his speech in Parliament but again regaining to some level to close at 29,361.50, high 141.38 points or +0.48 percent. The Nifty ended the day at 8,901.85 points, high 0.65 percent, which is 57.25 points higher than yesterday.

For most part of the morning, the markets remained in the green carrying on the positivity of the Economic Survey that was released yesterday. The indices boldly remained in the green almost till the middle of the finance minister but panicked towards the end. The volatility of the markets today could well be gauged as the difference between the intra-day highest and lowest points is a whopping 678 points.

ITC suffered the most during the special session of trading with additional excise duty being levied on the tobacco industry. The stock went down by 8.27 percent to close at 361.25.

“The standard ad valorem rate of Basic Excise Duty is being increased from 12% to 12.5% and specific rates of Basic Excise Duty on petrol, diesel, cement, cigarettes & other tobacco products (other than biris) are being suitably changed,” the Jaitley said in his speech.

Cigarette makers Godfrey Phillips India and VST Industries also took the same path and fell sharply.

Among other sectors, public sector firms NTPC and BHEL were among the losers.

But it was not a bad day for the banking sector. Axis Bank was the biggest gainer of the day among all sectors making a windfall gain of 8.15 percent at 613.40. Another banking stock ICICI Bank also rose 3.15 percent to 345.55 points. IndusInd Bank rose 6.07 percent to reach 915.95 points while Yes Bank ended the day at 862.75 points, high 5.10 percent from yesterday’s close. It was a cheerful day for the S&P BSE Bankex as it closed the day up 714 points.

Among the automobile stocks Tata Motors and Eicher Motors made the most of the day. Tata Motors led the segment with a gain of 3.15 percent, closing at 593.65 points. For Eicher Motors it was a high of 2.65 percent at 16,226.60. However, Apollo Tyres ended the negatively at 175.25 points, less 2.50 percent than last close.

It was not a happy weekend for the BSE Capital Goods Index as it failed to trade in the green. Pipavav Dockyard went down 3.43 percent to close at 74.65 points. BHEL lost 3.21 percent to finish the day at 262.15.

Despite the finance minister announcing the government’s proposal to set up five new Ultra Mega Power Projects, each of 4,000 MWs in the plug-and-play mode, it was too little to infuse energy into the S&P BSE Power index. Except Alstom T&D India, which rose 2.34 percent to close at 521.50 points, all the other stocks in the index either ended in the red or remained flat.

Although Tata Steel gained 1.31 percent to close the day at 355.65 points along with Jindal Steel that gained 1.11 percent percent, the S&P BSE Metal ended the day on a dampener, largely because of new duties levied.

“Tariff rate on iron & steel and articles of iron or steel, falling under Chapters 72 and 73 of the Customs Tariff, from 10% to 15%. However, there is no change in the existing effective rates of basic customs duty on these goods,” Jaitley said while announcing the increase in the basic customs duty.

The S&P BSE oil and gas traded in the green with Hindustan Petroleum leading the surge with a gain of 2.98 percent at 621.80 points.

The deferment of the General Anti-Avoidance Rules or GAAR by two years could sound as music to investors from abroad as it would make investing easier bringing in more foreign money. Another boost to the industry was the reduction of corporate tax for the next four years.

“… propose to reduce the rate of Corporate Tax from 30% to 25% over the next 4 years. This will lead to higher level of investment, higher growth and more jobs,” Jaitley said in course of his speech.

However, the S&P BSE PSU index was a let down today with a loss of 2.98 percent with only Hindustan Petroleum taking some lead.