The benchmark Sensex and Nifty swung wildly on Thursday, but ended lower for the third straight day. Investors took time to understand finance minister Arun Jaitley's maiden Union budget, which promised greener pastures, but held back on big-bang reforms.
Jaitley pledged to narrow the fiscal deficit and opened the defence and insurance sectors to more foreign investment. There was, however, not much by way of major reforms to excite investors.
The Sensex rose to a day's high of 25,920.46 points, but, analysts said there was some profit-booking towards the end of the session. The 30-share BSE Sensex closed down 72 points or 0.3% to close at 25,372.75 for the day, while the 50-share NSE Nifty closed down 17 points or 0.2% at 7,567.75.
"The Budget has evoked a mixed response from market men," said Amar Ambani, head of research at IIFL, a Mumbai-based brokerage firm. "While many rejoiced at the lack of a devil-like hike in corporate taxes and a reaffirmed commitment to the fiscal deficit target set during the interim budget, others possibly expected more positive news due to the strong mandate this government received."
Among major losers, SBI, ICICI Bank, Axis Bank and Mahindra & Mahindra fell around 1%, while Hero MotoCorp was down almost 4%. Tech stocks continued to fall ahead of Infosys' first quarter earnings announcement on Friday. While the stock was down 0.5%, rival Tata Consultancy Services shed 2%.
"The new government didn't come up with any big-bang changes to what was introduced in the interim budget by UPA government," said Rakesh Goyal, senior vice-president, Bonanza Portfolio. "The Budget didn't say anything about the rationalisation of subsidies, which was widely expected by most market players."
Analysts Sonal Varma and Aman Mohunta of the Japanese research firm Nomura describe the budget as a "mixed bag". "The government did not use the opportunity to come clean on subsidies, which is a disappointment," they said.
However, others like Vinod Nair, head of research, Geojit BNP Paribas, are willing to concede that the government has done a fair job, considering the mountain of expectations from it by the voters. "It is a very good budget," he said. "Over the near-term, we are likely to see change in existing norms."
Stocks of real estate companies were among the top performers on Thursday after the finance minister announced that real estate investment trusts or REITs would get pass-through entity status among other incentives. DLF surged more than 9%, Prestige Estates gained almost 7% and Housing Development and Infrastructure and Indiabulls Real Estate were up over 5%.
Among other gainers, IDFC rose 9% on government's measures to boost infrastructure lending. Infrastructure companies like IRB, GMR and Ashoka Buildcon also gained on the budget boost for the roads sector, which set aside an investment of Rs 37.8 crore for building both national and state highways.