Markets slip to 3 mnth lows, Budget fails to cheer

Banks, auto shares among key draggers, IT stocks buck trend

Indian share slumped on Thursday to end at three-month lows after the Union Budget 2013-14 present by the Finance Minister P. Chidambaram in the Parliament today failed to cheer investor sentiment. Market sentiment dampened after higher-than-expected borrowing programme and expenditure for 2013-14 raised worries over high inflation and growth.

The Sensex ended down 291 points at 18,861. Nifty shed 104 points at 5,693.

The Finance Minister announced higher-than-expected borrowing at 6.29 lakh crore in 2013-14 against Rs 5.58 lakh crore in the current fiscal. The total Budget expenditure will hit Rs 16.65 lakh crore in the fiscal that begins on April 1, Chidambaram said that despite expectations for cuts from current year levels, which are on track to hit Rs 14.3 lakh crore, or 96% of the Budget target.

"The high gross borrowing and the higher spending is going to be inflationary and RBI would rather think of slowing the pace of monetary easing rather than increasing it." said Rupa Rege Nitsure, Chief Economist, Bank of Baroda.

Elsewhere in Asia, however, markets remained strong with investors keying into comments from the head of the U.S. Federal Reserve emphasizing an ongoing commitment to monetary stimulus. Hang Sengm Shanghai Composite and Nikkei soared 2-3% each. The yen was defensive, with Japanese Prime Minister Shinzo Abe nominating Asian Development Bank President Haruhiko Kuroda as Bank of Japan governor, and academic Kikuo Iwata as one of the two deputy governors. Both are seen by markets to support Abe's call for unconventional reflationary stimulus measures, and that view has underpinned yen selling.

Back home, BSE Consumer durables index surged 0.8% at 7,172. IT index remained in green. However, weakness was seen in capital goods, metal and banking shares. BSE power index slipped 4.2% at  1,744. Oil & Gas index shed almost 1.6% after the FM promised that oil and gas exploration policy will be reviewed and moved from profit sharing to revenue sharing. He also assured that a policy on exploration of shale gas is on the anvil.

TCS surged 2% at Rs 1,515. Bharti Airtel, Tata Motors, Sun Pharma and Bajaj Auto were also in green.

Coal India ended flat at Rs 310. The company gained in morning trades on inviting bids from bankers and interested parties for acquiring coal assets overseas.

ICICI Bank and SBI accounted for a 96 points loss on the Sensex. This followed the Finance Minister's proposal to continue the interest subvention scheme for short-term crop loans. “The interest subvention scheme for short-term crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4% per annum,” the Finance Minister P. Chidambaram said in the Budget speech.

Chidambaram had the import duty raised from 75 to 100 per cent on luxury vehicles. Excise duty on SUVs has been increased to 30 per cent from 27 per cent but SUVs registered as taxis are exempted. The auto space has reacted to this news. Ashok Leyland was down 2.5%, Escorts and BEML also declined 2-5% each.

The import duty on set-top boxes has been raised from 5 to 10 per cent to safeguard interests of domestic producer. Dish TV shed 1% at Rs 65.35. Den Network tumbled 10%.

The duty free limit on gold has been raised to Rs 50,000 in case of male and Rs 100,000 in case of female. PC Jeweller crashed 9% at RS 115. However, GItanjali Gems was up 1.5% at Rs 581.

Among other losers were Jindal Steel, Tata Steel, Maruti Suzuki and Larsen & Toubro. Maruti Suzuki gets removed from the MSCI today. Market heavyweight - Reliance slipped 2% at Rs 815. Tata Steel. Maruti Suzuki, Larsen & Toubro and Hindalco were the key losers today in the index today.

BSE market breadth turned negative. Out of 2,931 stocks traded, 1,973 shares declined while 857 shares advanced.