Rail budget fails to impress Street; Nifty down 130 points

Profit taking in Oil & Gas, Capital Goods and banks weigh on the indices

Benchmark indices slipped nearly 1.5% in late noon deals on profit booking post Railway Budget. At 0250 hrs, the Sensex slumped 405 points to trade at 25,694 and the Nifty was down over 130 points at 7,656. This was the worse fall since January 26,2014.

Weakness in Oil & Gas, Capital Goods and banks weighed on the indices.

The sell-off was sharp in the broader markets with both the mid and smallcap indices down between 2-3%.

Meanwhile, the first rail budget of the current NDA government tried to strike a balance between the twin conflicting objectives of making profits like a commercial enterprise and yet serving its ‘social obligations.

The Railway budget had key initiatives for the passenger amenities, boosting freight performance and improving the efficiency of Indian Railways. Sadananda Gowda’s budget pins its hopes on increased participation from private players in station modernization, for safety measures like building boundary walls and expects foreign direct investment to aid in building Railway infrastructure.

Sectors & Stocks

Railway-related stocks fell on profit-taking. Earlier during the week, shares in the sector have surged on hopes of reforms including opening of the sector to foreign investments under newly-elected Modi government, traders say.

Texmaco Rail crashed as much as 18%; while Kalindee Rail, Stone India, Kernex Microsystems, BEML and Titagarh Wagons plunged 5% each.

Health Care index up 0.2% was the only sectoral gainer.

Realty, power, capital goods, metal and consumer durables indices down 3-5.5% were the major draggers.

Sun Pharma, HDFC twins and Cipla up 0.1-1.6% were the only gainers among sensex-30.

Infosys and Baja Auto were flat with a positive bias.

BHEL, NTPC, Sesa Sterlite, Tata Power, Coal India and Tata Steel down 4-7% were the major losers.

From the oil & gas space, ONGC, RIL and Gail India were down 1-4%.

The market breadth was very negative on BSE. 2,147 stocks declined while 781 stocks advanced.

Rupee

The rupee is trading at 59.74 compared with its Monday close of 60.0125/0225, tracking gains in other Asian currencies versus the dollar and on expectations of continued foreign fund inflows into local shares.

Global Markets

Europe's main stock indices and bond benchmarks dipped on Tuesday amid reports of new U.S. fines on banks and dimming prospects for an asset purchase programme from the European Central Bank.

The pan-European FTSEurofirst 300 index was down 0.1% at 1,380.33. Germany's Dax  was down 0.3%, France's CAC was down 0.1% and the UK's FTSE 100  was down 0.1%.

It was a quiet session in Asia, with the region's stocks tracking sideways as the earnings season kicked off with disappointing guidance from regional tech heavyweight Samsung.

MSCI's broadest index of Asia-Pacific shares outside Japan was a fraction firmer, touching a three-year high during the session. Nikkei and Strait Times were the only markets in red, down 0.4% and 0.1% respectively.