Sensex fizzles after rosy start
A lack of incentives for attracting private sector capital investment and a fiscal deficit closer to 6% saw the benchmark 30-share Bombay Stock Exchange (BSE) Sensex erase early gains and end down 209 points, or 1.2%, at 17,466 points. Marketsindia Updated: Mar 17, 2012 01:20 IST
A lack of incentives for attracting private sector capital investment and a fiscal deficit closer to 6% saw the benchmark 30-share Bombay Stock Exchange (BSE) Sensex erase early gains and end down 209 points, or 1.2%, at 17,466 points.
It was a session of dramatic intra-day swings for the Sensex, which gained 195 points in intra-day trade to touch a high of 17,871 before losing steam and touching a low of 17,427 points — a swing of 444 points."The initial positive reaction stemmed from certain proposals, such as the measures to encourage retail investment through tax sops but a high fiscal deficit figure, which means that interest rates would continue to remain high, negated the market sentiment," said Nirmal Jain, chairman and managing director, India Infoline.
He also blamed the lack of detailing on attracting private sector capital inflows into the stock market as another reason for the decline in the Sensex. Only two indices — the FMCG index and the auto index which gained 1.8% and 0.2% respectively — ended in the positive zone.
According to auto analysts two percentage point increase in excise duty for passenger vehicles will not have huge ramification, even though only Mahindra & Mahindra scrip traded in the green, up 2.7% at R677, as fears of a hike in diesel passenger vehicles were belied.
"Contrary to expectations there was no additional diesel tax. It was a positive for overall industry and especially Mahindra, a diesel player," said Surjit Arora, analyst, Prabhudas Liladhar
Adding a note of caution, CJ George, MD, Geojit BNP Paribas Financial Services, said retail investors should avoid short-term trades or intra-day trading.