A bad budget week on D-Street
Nobody said it was easy
It's such a shame for us to part
Nobody said it was easy
No one ever said it would be this hard
Awe take me back to the start
How could it come down to this? Should we call it mayhem? Or bulls going for a bungee jumping or excessive gains over past seven months? Inflation worries, a lackluster budget and China-led sell off in global markets contributed towards a heavy fall on the bourses for the second week in a row. Indian indices recorded biggest weekly losses in seven months. Everything was looking bright and rosy at the start of 2007 with marketmen predicting 15k levels before budget. However, looking at the scary scenes on Dalal Street in February, the bulls have an uphill task to reach its previous peak.
Emerging markets were at the receiving end after a rout in China's equity market fueled concern that investors will shift their focus away from riskier assets. Higher excise duties on cement companies and proposals to tax IT and construction companies broke the back of the market. As compared to last year, the Union Budget lacked big-bang measures, which didn't enthuse the bulls. As a result, the benchmark BSE Sensex tumbled 746 points or 5.4% during the week to close at 12,886. While the NSE Nifty slumped 5.3% or 212 points to close at 3727. Selling was seen across the board with Capital Goods, Banking, Cement and Construction stocks were the biggest losers. However, Sugar stocks bucked the negative trend and closed higher after government allowed 6 lakh tons of export.
Capital Goods stocks hogged the limelight for all the wrong reasons. L&T and Punj Lloyd and others pared gains towards the end on selling across the board. L&T fell by over 9% to Rs1464. The scrip was among the top three losers of the week. BHEL lost over 7.5% to Rs2099, ABB slipped by 4.6% to Rs3541 and Punj Lloyd declined over 5% to Rs788. The proposal to withdraw tax benefits under Section 80IA with retrospective effect sent shares of construction companies into a tizzy. HCC, GCC, Gammon, IVRCL, etc. were battered out of shapeAuto stocks were in reverse gear, despite strong monthly sales and news of price increases. The BSE Auto index was the top loser, slipping 6% on the week. Bajaj Auto declined over 10% to Rs2550, Tata Motors fell nearly by 5% to Rs774, Maruti lost 3.4% to Rs833 and Hero Honda declined 2% to Rs691.
IT stocks slumped after FM's proposal to extend MAT to IT firms. The BSE IT index fell 5.8% in the week. Heavy weights led the fall with Wipro being the top loser. The scrip declined over 8% to Rs573, Infosys was down 6% to Rs2103, TCS shed over 5% to Rs1208 and Satyam slid 4.7% to Rs427. HCL Tech, Financial Technology and I-Flex were the other major losers. Despite smart recovery on Thursday, IT stocks fell sharply ending the week lower.
Banking stocks also ended lower. The BSE Banking index lost 4.6%. ICICI Bank was the top loser, falling by over 6.5% to Rs845. Other frontline stocks like SBI lost nearly by 5% to Rs1008 and HDFC Bank slipped 1% to Rs947. PNB, Bank of India and Union Bank were the other key losers.
Cement stocks lost altitude following a steep hike in excise duty on cement, sold above Rs190 per 50-kg bag. For cement priced below Rs190 a bag, the tax will be lowered. Gujarat Ambuja was the top loser, in the Nifty. The scrip plunged by over 10% to Rs109, Grasim lost by over 7.5% to Rs2096, ACC slipped 6.5% to Rs855 and Mangalam Cement declined over 6% to Rs2096.
Sugar stocks turned sweeter. Shree Renuka was the top gainer, rising by over 18% to Rs330, Bajaj Hindusthan rose over 11% to Rs179, Balrampur Chini surged by over 10% to Rs62 and Sakhti Sugar added 4.4% to Rs69.
Sesa Goa, which is the subject of a takeover battle, was extremely volatile. The scrip swung by over Rs500 in the week before ending down 13% at Rs1661. It hit a high of Rs2025 and a low of Rs1485 during the week. Sesa Goa was one of the losers in budget following a proposal to impose tax of Rs300 per ton on Iron Ore exports. The company expects to lose Rs1.5bn in FY08.