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The budget cleared the way for foreign investors to invest in Indian equity market through domestic mutual fund schemes, which helped sentiments. In addition, the market cheered the government's lower fiscal deficit target for financial year 2011-12, lower-than-expected net borrowing, proposals to boost infrastructure investment and a reduction in surcharge on corporate tax.
After a firm opening on global cues, Sensex kissed the 18,000 mark in after i noon trade soon after the budget announcement. However, there was little bit of nervousness in late afternoon trade, i which wiped off most of the gains towards i the end. The 30-pack index finally closed at 17,823.40, a gain of 0.69 per cent over its previous close.
Nifty gained 29.70 points, or 0.56 per cent, to settle at 5,333.25. All BSE sectoral indices, except for the BSE healthcare index, ended with gains. The turnover in NSE's cash segment rose to Rs 16,539 crore compared with Rs 13,502 crore in the previous session.
"The budget was mildly populist and it largely attempted to tame inflation and rein in fiscal deficit. The stock market's reaction has been positive only because it had factored in heavy pessimism such as a hike in excise duty and service tax rate and expected a bigger market borrowing figure," said Amar Ambani, head of research at India Infoline.
Among Sensex stocks, ITC, Maruti Suzuki and ONGC advanced 8.23 per cent, 3.07 per cent and 2.93 per cent, respectively. M&M rose 3.19 per cent to Rs 614.10 after the budget proposed launch of a national mission for hybrid and electric vehicles. Jaiprakash Associates declined 2.88 per cent to Rs 77.50 after the finance minister proposed to replace existing excise duty rates with composite rates having an ad valorem and specific component with some rationalisation.
Losers included Reliance Infrastructure, Hero Honda and Tata Motors, which declined 4.46 per cent, 2.36 per cent and 2.11 per cent, respectively.
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