Sensex witnesses biggest fall on Budget Day in 11 years as FM disappoints

The Finance Minister Nirmala Sitharaman’s Budget 2020 failed to cheer D-Street as market witnessed its biggest fall on the Budget Day in the past 11 years, according to CNBC-Tv18 data.

Both Sensex & Nifty posted their biggest single-day fall in nearly 5 years. The Nifty Bank posts the 2nd biggest one-day fall ever. Nifty Midcap Index slipped nearly 500 points, biggest 1-day fall in 16 months.

The S&P BSE Sensex was down by nearly 1000 points while the Nifty50 plunged over 300 points on the Budget Day. Investor wealth as per average market capitalisation of the BSE listed companies was down by nearly Rs 4 lakh cr.

Sectorally, the biggest loser was Realty sector followed by Capital Goods, Industrials, public sector, finance, and metal indices. IT index was the lone gainer.

The NiftyBank plunged 3.3 percent or 1026 points weighed down by losses in RBL Bank, SBI, Bank of Baroda, ICICI Bank, and IDFC First Bank.

Top Nifty gainers: Nestle India, Tech Mahindra, HUL and TCS

Top Nifty losers: ZEE Entertainment, HDFC, Tata Motors, and ITC.

Big Talking points from Budget for markets:

Experts are of the view that Budget was below par and uninspiring. The need of the hour was much more that what the Budget delivered. Income tax changes were positive but with additional riders disappointed the street, they say.

The market has reacted negatively to the Budget, mainly due to disappointments on account of non-abolition of LTCG, confusion about the impact of DDT removal and taxing dividends in the hands of recipients.

Also, the alternative provided to individuals for lower rate of tax, provided they do not claim exemptions/deductions, did not seem too attractive, suggest experts.

Tweaking investment limit for FPI in corporate bonds will help our currency.

In line with market expectations, with the fiscal deficit in FY20 is pegged at 3.8%, and 3.5% for FY21.

Abolished dividend distribution tax | Revenue forgone on dividend distribution tax Rs 25,000 crore

Proposal to divest LIC via IPO | FPI limit in corporate bonds to be raised to 15% from 9%

To float new debt ETF comprising primarily of gilts

“Budget was below the par considering that market had very high expectations from the government. Adding flexibility to fiscal deficit of FY20 is positive but extending the same to FY21 would have provided more confidence to the market,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told Moneycontrol.

“Income tax changes announced has come with riders of giving up exemptions which disappointed the markets, with the insurance sector being impacted the most. Since the event is over, the focus will now turn to ongoing Q3 announcements and how global events unfolds in the near term,” he said.

Stocks & Sectors:

Sectorally, the S&P BSE Realty index was down 8 percent, followed by the Capital Goods index that fell 4.8 percent, and the S&P BSE Infrastructure index was down 4 percent.

The S&P BSE IT index rose 1.2 percent

Volume spike of more than 100% was seen in ITC, MFSL, and ICICI Prudential

Short Buildup – Coal India, Power Grid, ONGC, LIC Housing Finance, and NMDC

Stocks in news:

ITC falls 7% after excise duty was hiked on cigarettes & tobacco products

Insurance companies slipped up to 12% as Budget print has no IT exemptions

Realty shares ended lower and was the top sectoral loser in absence of any budget sops.

IDBI Bank surges 10% as govt looks to sell its stake

Maruti, M&M in the red despite higher-than-estimated auto sales

Technical View:

Nifty formed a bearish candle on the daily charts

It also tested its 200-day exponential moving average (11663) with an intraday low of 11633 levels.

As the index is hovering around its 200-Day moving average, some consolidation can’t be ruled out in in the next session

As trend appears to be decisively turned in favour of bears, rallies can be used to create fresh short positions, suggest experts.

In case if index slips below 11633 levels then the next logical target can be placed around 11342 levels

For time being traders are advised to remain neutral on the long side whereas in next session shorting can be considered if Nifty trades below 11633 levels for more than 30 minutes for a target of 11400 levels with a stop above intra day’s high.

Three levels: 11342, 11633, 11700.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

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