Non-Event Budget Drags Markets Down

After the government hiked the Service Tax and excise duty in the Union Budget, the Indian markets tanked heavily by 1.1%. The markets were seen in the positives in the morning trades, but started moving downward as the budget announcements were made. While there were some good sector-specific announcements, the budget missed to make any big moves. Besides, with the duties hiked, the market now fears that inflation will go up, deferring the rate cut expected in a few months.

Other Asian indices remained almost flat at the end of this week. There was no forward movement in the Hang Seng and Nikkei. Shanghai, however, closed with 1.3% intraday gains.

All the key European indices are currently trading in positives.

Dow Jones Futures is currently trading 0.46% or 60 points up at 13026, indicating a positive sentiment in the US market.

Back home, only the FMCG and Auto indices managed to remained positive. All the other indices were substantially down. Oil & Gas was the top loser, with over 3% losses. Power was also down by over 2.98%, as no big announcement showed up. CG, PSU, Metals and HC were also all down by over 2%.

Among the Sensex stocks, ITC was the top gainer, ending with 3.65% gains. Mahindra & Mahindra, HUL, Maruti Suzuki, Coal India, HDFC, TCS, Wipro and DLF were the other stocks that gained. All the rest were down by closing time. Sun Pharma was down 7.09%, and ONGC and JSW Steel were also down by more than 4%.

Overall, the market breadth remained negative today. Out of total of 3295 stocks traded on the BSE, 1121 stocks (34%) advanced, 2053 stocks (62%) declined and 121 stocks (4%) remained unchanged.

With the Union Budget disappointing the markets, we expect the impact to remain on the markets in the next week as well. There is no big event lined up soon, and the markets will play volatile in the next week. We advise investors and traders to tread cautiously.