Indian shares fall for 5th week; Budget disappoints

Indian equity markets settled sharply lower for the fifth consecutive week as investors expressed broad disappointment over the budget. Indices fell below three month low. On the other hand, weak global cues also dampened the market sentiment. Overall, budget failed to cheer market participants. Realty, PSU and Oil & gas were the major laggards during the week.

The Finance Minister P. Chidambaram presented an overall neutral Budget. As expected, Chidambaram has made steep hike in allocation to social and rural schemes, eyeing general elections due next year. At the same time, he has pegged fiscal deficit at 4.8% for next fiscal to avoid possible rating downgrade. However, it was disappointing for most industries, which are looking at growth stimulus and for common man looking at reduction in taxes.

The 30-share index, Sensex plunged 398.49 points or 2.06% over previous week to 18, 918.52. On the other hand, the broad based NSE Nifty dropped 130.6 points, or 2.23%, to 5,719.7. Meanwhile, BSE Midcap and Smallcap index fell sharply by 4.36% and 5.63% respectively.

Most of the sectoral indices were badly hit barring Consumer durables, IT and Teck, which gained 3.71%, 2.39% and 1.71% respectively.

Top losers in the BSE sectoral were Realty (8.6%), PSU (5%),Oil & gas (4.59%), Metal (4.56%), Bankex (4.43%), Power (3.84%), Capital goods (3.55%), Healthcare (2.5%), Auto (0.8%) and FMCG (0.21%).

''Markets have corrected 6% over the past month largely on back of deteriorating domestic macro scenario. With the Budget out of the way, market participants will look at the global cues for further direction. A global risk-off may further accentuate selling pressure in near term. However, with indices at oversold levels, a lot of beaten down large-caps may attract investors,'' said Amar Ambani, head of research, IIFL.

Nidhi Sarswat, senior research analyst, Bonanza Portfolio said, ''Nifty has shown some recovery from lower levels however it is still trading below 5,750 resistance level closed below 5,700 level and thus till then near term trend remains bearish or sell on rallies can be seen. Any definite steps towards policy implementation can lead to boosting market sentiment. Global cues may also help.''

''In coming sessions, 5,680 shall be crucial deciding level in near term, and index is likely to witness further selling below this level. Below 5680, likely target is 5,625-5,550, while above 5,765, likely target is 5,815-5,850,'' she added.