Markets: Sensex Ends Nearly 400 Points Lower As Budget Fails To Enthuse Investors; Nifty Closes Near 11,800
Closing Bell: Sensex Ends Nearly 400 Points Lower As Budget Fails To Enthuse Investors; Nifty Closes Near 11,800
Indian equity benchmarks ended lower after the Finance Minister’s Nirmala Sitharaman Union Budget failed to impress investors.
The S&P BSE Sensex closed 395 points or 0.99 percent lower at 39,513 and the NSE Nifty 50 closed at 11,811.15, down 1.14 percent. The broader market index represented by the NSE Nifty 500 closed 1.22 percent lower.
The benchmarks indices trimmed their weekly returns after gains in Indiabulls Housing Finance Ltd. and IndusInd Bank Ltd. during the week were offset by losses in Yes Bank Ltd.and Sun Pharmaceutical Industries Ltd.
The market breadth was tilted in favour of sellers. About 1265 stocks declined and 476 shares advanced on National Stock Excahnge.
Eight out of 11 sectoral gauges compiled by NSE ended lower, led by the NSE Nifty Metal Index’s 3.7 percent fall. On the flipside, the NSE Nifty FMCG Index was the top sectoral gainer, up 0.28 percent.
How Volatility Index Performed On Budget Days
The NSE Nifty Volatility Index fell 3.86 percent today after the Finance Minister Nirmala Sitharaman presented Union Budget.
Here’s how volatility index reacted on Budget days:
Centre To Borrow In Foreign Currency
The Indian government will raise part of its gross borrowing requirements via foreign currency borrowings, Finance Minister Nirmala Sitharaman said while delivering her budget speech.
This is a very fundamental shift in the budgeting process and in the budgeting philosophy, in that we are seeking external funds for sovereign needs. This is a big deal and recognises for the first time that domestic household savings are simply not enough to finance the enormous needs of the government and the related entities and leave anything substantial behind for the private sector. That’s a big reform measure.Abheek Barua, Chief Economist, HDFC Bank
It Is About Time India Tapped Foreign Borrowings, Ananth Narayan
By actually borrowing from foreign markets and getting savings from overseas, you’re freeing up domestic savings for private investments....You also set up a benchmark for onshore investors to to access the global market, SP Jain Institute’s Associate Professor Ananth Narayan told BloombergQuint in an interaction.
Dalal Street Reacts To Budget 2019
The red-carpet treatment given to foreign investors needs to be extended to local investors as well, according to Kotak AMC’s Nilesh Shah.
The finance minister said investment limit for foreign investors in listed securities will be harmonised with foreign direct investment limit in the relevant sector. There was also a proposal to merge NRI portfolio limits with FPI limits.
The free-float floor increase will help increase Indian equities’ weightage in MSCI indices, Shah said. While the bond market moves will allow more infra spend without crowding out private sector, he said.
According to S Naren of ICICI Asset Management Company, there was no room to consider any fiscal move to boost consumption as problems like the slowdown, excess realty leverage doesn’t go away overnight. He said the measures taken in the budget will help the bond market.
Meanwhile, here’s what FIIs made of the budget:
Defence Stocks Decline After Government Exempts Arm Imports
Defence stocks declined in today’s trade after the Centre proposed to exempt defence equipment imports from custom duty to encourage mordernisation of Indian armed forces.
“Defence has an immediate requirement of modernisation and upgradation. This is a national priority. For this purpose, import of defence equipment that is not being manufactured in India are being exempted from the basic customs duty,” Finance Minister Nirmala Sitharaman said today.
India's Overseas Bond Sale To Free Up Local Liquidity: FirstRand
India’s plan to sell sovereign bonds overseas is most welcome as it will open up a new source of funding the budget deficit, says Harihar Krishnamoorthy, treasurer at FirstRand.
Once successfully established with investors, it will play a critical role in reducing the local government borrowing in rupee and alleviate the pressure on local liquidity, leaving more funds in the local market, he told Bloomberg.