Mumbai : The Dalal Street witnessed a virtual see-saw on Thursday before closing lower for the third consecutive day. In the process, the Sensex moved like a yo-yo in an 800-point band, eventually ending just 72 points lower at 25,372. The Nifty fell 17 points to close at 7,568.
The market was flat in early trade and but revved up just as Finance Minister Arun Jaitley started reading his Budget speech. There was some excitement when Jaitley said the government will try to find a solution to implement the goods and services tax by year end. But he stopped short of giving a date for the implementation of the much awaited reform measure, which dampened the market sentiments. Jaitley’s announcement scrapping retrospective taxes was also elusive and He merely promised to set up a high-level committee to review tax claims under the law. Sensing the dichotomy, the market applied breaks on gains and the Sensex fell as much as 327 points within a few minutes in to the Budget speech.
The biggest surprise & trigger for gains was Jaitley’s announcement that his government would retain the previous government’s fiscal deficit target at 4.1 per cent of the GDP. But the finance minister did not elaborate on how the government will meet the tough challenge. So, even as analysts welcomed Jaitley’s pledge to keep government finances in check, the lack of details on how to narrow the fiscal deficit impacted the markets and Sensex closed 72.06 points down.
FISCAL CONFUSION: India’s benchmark 10-year bonds gave up some of their gains on Thursday over confusion about the government’s fiscal deficit target for the current fiscal year. Finance minister Arun Jaitley had earlier announced the country would stick to the previous government’s fiscal deficit target of 4.1 percent of gross domestic product for the year ending in March 2015, but later in the speech said the target stood at 4.5 percent in a passing reference. Traders said the contradiction had created confusion, although they said Jaitley may have misspoken.
