A lack of big-bang reforms, the absence of an expected rollback of retrospective taxation and negative cues from the European market deflated sentiment. But the underlying bullish sentiment limited losses, said experts.
The Sensex moved between 25,117 and 25,920 during the day, an 803 points swing before closing at 25,373, down 72 points or 0.28 per cent on previous close. The National Stock Exchange's Nifty closed at 7,567.75.
Ramesh Damani, member of BSE, said the sentiment may have been affected by the lack of a move to scrap retrospective taxation, but the underlying sentiment remained bullish.
"My sense is the honeymoon period of the Narendra Modi government is still on. The market is likely to give a long rope to the government in spite of the lack of big-bang reforms," he said.
"I believe the Budget is positive for the markets. Given the reform orientation covering rural to urban economy, we think this Budget should be given full marks," said Deven Choksey, managing director at KR Choksey Shares & Securities.
Volumes at Rs 4.97 lakh crore were up 61 per cent on the daily average turnover over the last one month. The NSE's derivative segment saw record volumes of Rs 4.41 lakh crore.
|CHANGES FOR THE MARKET|
Tax arbitrage removed
Seven of 12 sectoral indices ended with gains. The index tracking the real estate sector was the biggest gainer, up 4.96 per cent as the government moved to ease funding for it. Consumer durables was the worst-performing one after an imposition of a cess on imports, expected to have an impact on revenues in the short term. An index tracking the sector was down three per cent.
"People went into this Budget with the baggage of the railway Budget and expected it to disappoint as well. But as the speech began and the finance minister started to announce measures for the manufacturing sector, that took up the market. During the second half of the day, markets fell because of declines in global markets caused by a default in payments by a company in Portugal," said Siddharth Bhamre, head, investment advisory and derivatives, Angel Broking.
Reports said Espírito Santo Financial Group, which holds a majority stake in Portugal's Banco Espírito Santo, was hit by a payment issue. The news also affected fund-raising efforts by the Greek government through the issue of bonds.
Foreign portfolio investors were net buyers by Rs 161 crore. Domestic institutions were net buyers by Rs 5 crore.