Market nosedives, Rs 1 lakh crore lost
According to PTI, investors lost close to Rs 1 lakh crore as the market gave a thumbs down to the interim Budget, which failed to provide any sops for key sectors.business Updated: Feb 17, 2009 00:08 IST
Share prices fell sharply as investors sold on being disappointed at the government not announcing a package to provide a stimulus to the sagging economy.
According to PTI, investors lost close to Rs 1 lakh crore on Monday as the market gave a thumbs down to the interim Budget, which failed to provide any sops for key sectors.
The Sensex fell 3.42 per cent to 9,305.45 points, the biggest decline this month.
“Judging by the equity market’s reaction to the interim budget speech, there is plenty of disappointment to what was said or, rather, what was not said,” said Robert Prior-Wandesforde, Singapore-based Senior Asian Economist with Hongkong and Shanghai Banking Corporation.
Reliance Industries Ltd fell 5.2 per cent and DLF Ltd, real estate developer, fell 2.4 per cent as the government refrained from announcing any measures to review demand in the economy.
Shares of banks were also lower, weighed down further by a Rs 8,000 crore contraction in credit outstanding in the fortnight ended January 30, 2009. State Bank of India fell by 4.9 per cent to Rs 1,136.85, ICICI Bank by 5.9 per cent to Rs 409 and HDFC Bank by 3.2 per cent to Rs 913.95.
Sudip Bandyopadhyay, Director & CEO, Reliance Money, said: “Markets were probably a bit unrealistic in expecting a whole lot of relief and measures in the interim budget. From a broad economic point of view, the two fiscal packages announced earlier need to work on ground.”
Prior-Wandesforde of HSBC echoed these views. “We shouldn’t forget that there is plenty of fiscal easing already in the pipeline, totalling around 2.5 per cent of GDP, while the RBI has delivered significant conventional and unconventional policy easing measures as well.”
Attention is now bound to refocus on the RBI and to what extent it is prepared to cut rates further. “Judging by recent comments from Governor Subbarao some sort of action looks imminent and we continue to expect 50 basis points reductions in the repo, reverse repo and CRR in the next two or three weeks,” said Prior-Wandesforde.