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Sensex Slides On Budget Disappointment

In Sensex news, the worsening global recession and disappointment over the interim budget 2009-10, led to a fall in the stock market for the week ended February 20. The industry termed the interim budget 2009-10 presented by External Affairs Minister Pranab Mukherjee, who holds charge of Finance, a lackluster one. In what was seen a non-event interim budget, Mukherjee merely fulfilled a constitutional requirement for expenditure approval until the presentation of a full budget. The share market remained relatively quiet before the budget and with no sector-specific stimulus package it was a free fall. In a largely volatile market, the BSE Sensex dropped in 4 out of 5 sessions. In an election year, the government went on a spending spree, ignoring the ballooning fiscal deficit. The finance minister dashed out the hopes on tax cuts and announcement of another stimulus package to boost the sagging economy. In Sensex today, foreign institutional investors pulled out Rs 5,425.90 crore in 2,009 (till February 19) which during a year earlier was Rs 52,998.70 crore in 2008. During the week, the BSE 30-share Sensex shed 791.53 points, or 8.22 per cent while the BSE Mid-Cap index lost 221.23 points or 7.34 per cent and the BSE Small-Cap index tumbled by 234.99 points.

In BSE Sensex today, during the first day the week, on February 16, the BSE 30-share Sensex lost 329.29 points, or 3.42 per cent, in absence of global cues and disappointment from the interim budget. On February 17, the Sensex extended Monday's losses and tumbled by 270.45 points, or 2.91 per cent mostly on global cues. The world markets were under pressure following investors concerns over the global financials. The country's deteriorating finances was another concern as acting Finance Minister Pranab Mukherjee revised the fiscal deficit to 6 per cent of GDP for the current fiscal as against 2.5 per cent projected earlier. The Sensex on February 18 remained highly volatile mostly on global cues with the BSE 30-share Sensex ending nearly flat with loss of 19.82 points or 0.22 per cent. However, in a lackluster session, the Sensex on February 19, snapped its three-day losing streak by gaining 27 points, with buying support seen in IT stocks.

There were widespread expectations among market participants on the Reserbe Bank of India of further cut in interest rates to boost demand. Inflation for the first week of February dropped to its 14-month low of 3.92 per cent due to slump in oil and other commodity prices. Experts believe that the country's' inflation could soon fall to 2 per cent by the end of March, which may lead to deflation “ a trend where falling prices prompt buyers to postpone purchases, thus, adding to the downturn. India's largest engineering and construction conglomerate, L&T, was down 11.21 per cent for the week ended February 20. In stock market news, the Company Law Board (CLB) on Thursday permitted Saytam board to induct a "strategic investor" through shares auction and allowed a hike in the Satyam's authorised equity share capital from Rs 160 crore to Rs 280 crore. Among the major movers in markets were Reliance Industries, L&T, Maruti, Mahindra & Mahindra, Reliance Communication, Reliance Infrastructure, Tata Steel, Hindalco Industries, Sterlite Industries and Steel Authority of India.

By: Dia Shai