Budget disappoints,markets dip

The Sensex slipped after the markets reacted adversely to the Union Budget announced last Monday. It slumped nearly 1,409 points (declining 9.4 per cent) from the previous week’s close and ended at 13,504 points on the last trading day of the week. The Sensex is currently trading at a price to earnings ratio of 17.8. Foreign institutional investors invested around Rs 3,901 crore in equities during the week.

According to Sonam Udasi,vice president,research and group head-consumer sector,Brics Securities,“A lot of what happened in the market this week was a reaction to the Budget. The Budget was expected to come up with a big idea that would enthuse the markets,but that did not happen. There was disappointment due to the lack of policy announcements regarding foreign direct investment limits and disinvestment.”

Nearly all the sectoral indices slipped into the red during the week. The only exception was FMCG that managed to rise by nearly 4.2 per. “It was a pro-rural Budget and much of the growth of the FMCG sector nowadays depends on growth within the rural sector,” says Udasi. The major losers during the week were Banking and Realty: they declined by nearly 13.5 per cent and 17.2 per cent respectively. “The sectors that witnessed major upsides post election are facing some correction after the Budget,” points out Udasi.

The rate of inflation slipped further to (-) 1.55 per cent for the week ended June 27 from (-) 1.30 per cent in the previous week. Crude oil prices are currently in correction mode,declining nearly 6.2 per cent during the week. Crude is currently trading at $59.19 per barrel.