By RTT News, February 28, 2013, 06:23:00 AM EDT
(RTTNews.com) - Indian shares fell sharply on Thursday, reversing early gains, as the Union Budget failed to impress investors. Faced with a huge fiscal deficit, Finance Minister Chidambaram proposed a 10 percent surcharge on individuals with Rs.1 crore income and slapped an added surcharge on local companies with taxable income of over Rs. 10 crore. The surcharge will also apply to dividend distribution tax.
Chidambaram unveiled a bigger-than-expected outlay for the coming fiscal year, with gross market borrowing seen at 6.29 trillion rupees in 2013-14, stoking fears of inflation and a tight monetary policy.
Falling to three-month lows, the benchmark BSE Sensex ended the session down 290 points or 1.52 percent at 18,862. The broader Nifty index fell by 104 points or 1.79 percent to 5,693, while the BSE mid-cap and small-cap indexes lost 2.5 percent and 2 percent, respectively.
Banks bore the brunt of the selling after the finance minister said the government will continue with the additional three percent interest subvention scheme for farmers. State-owned SBI led the decliners with a 5 percent loss, while private sector lender ICICI Bank tumbled 3.3 percent and HDFC Bank lost 1.8 percent.
Energy giant Reliance Industries retreated 1.7 percent after Chidambaram said the new oil and gas exploration policy will move from profit-sharing to revenue-sharing contracts.
Realty stocks like Godrej Properties, HDIL, Indiabulls Real Estate and Unitech lost 3-8 percent after the finance minister proposed to levy 1 percent TDS on the transfer of immovable property where the consideration exceeds Rs. 50 lakh.
Automakers turned in a mixed performance after the finance minister increased excise duty on sports utility vehicles. Mahindra and Mahindra, India's largest SUV manufacturer, lost 2 percent, and Maruti Suzuki declined 2.6 percent, while Tata Motors rose 0.3 percent. Two-wheeler manufacturer Bajaj Auto added a percent and Hero MotoCorp closed up 0.3 percent.
Cipla fell 1.7 percent as the drugmaker offered to buy all shares in South Africa's Cipla Medpro for $512 million. Dish TV slipped half a percent and Den Networks slumped 9.5 percent following a hike in import duty on set-top boxes.
Shares of Suzlon Energy plummeted 30 percent after its promoter raised Rs. 240.40 crore by selling almost 11 crore shares of the company, representing 6.2 percent of the paid-up capital.
Jet Airways rose 0.7 percent after UAE flag carrier Etihad bought Jet's three flight slots at London's busy Heathrow airport for $70 million. Coal India gained half a percent after the government said it would encourage power purchase agreement projects. Everonn Education rallied 3.5 percent after the budget increased allocations for the education sector.
On the global front, other Asian and European stocks gained ground, thanks to a weaker yen, upbeat U.S. pending homes sales data, a relatively smooth auction of Italian bonds yesterday and the announcement of Asian Development Bank chief Haruhiko Kuroda as the next governor of the Bank of Japan.
Meanwhile, echoing Fed Chairman Ben Bernanke's comments before a congressional committee, ECB President Mario Draghi signaled the central bank has no intention of tightening monetary policy anytime soon, as he anticipates inflation to come significantly below the bank's target this year.
For comments and feedback: contact email@example.com