Mumbai, March 1: The stock markets today set aside their budget anger to post gains after the finance ministry assured investors that it would address the concerns over tax residency certificate raised in the Union budget yesterday.
The BSE Sensex, which had crashed 291 points yesterday to a three-month low of 18861.54, opened firm and rose to an intra-day high of 18988.97. It closed at 18918.52, a modest gain of 56.98 points, or 0.30 per cent.
Finance minister P. Chidambaram had yesterday said in his budget speech that a tax residency certificate would not be enough to seek benefits under the double taxation avoidance agreement, triggering a collapse on the bourses.
Today, the finance ministry said investors’ worries over tax residency would be “suitably” addressed during discussions on the Finance Bill in Parliament.
The NSE Nifty today rose 26.65 points, or 0.47 per cent, to 5719.70.
“It (the clarification) certainly brought some relief to the investing community. However, since the Union budget did not contain any significant measures to bring in investment, the markets could not rally. Much will now depend on what measures the government and the RBI will take to push growth and investments,” an analyst with a foreign brokerage said.
Stocks of HDFC, L&T, HUL, Cipla and Jindal Steel gained 2-3 per cent. Buying was seen in the stocks of consumer durables, capital goods, auto and banking, while IT stocks such as Infosys gained on a weakening rupee. Banking stocks, which ended in the negative yesterday on concerns over the government’s higher borrowing, today rose on hopes that the RBI could cut rates soon.
The buying was also supported by positive cues from Asia and Europe.
While many in the markets had called the budget a non-event, a few feel the finance minister did a good job in the current circumstances.
Deepak Chatterjee, managing director and CEO at SBI Funds Management, told The Telegraph the budget was not disappointing as the finance minister did not have much elbow room to announce big-bang measures.
The rupee today fell 53 paise to close at nearly a two-month low of 54.89 because of heavy dollar demand from oil importers and may breach the 56-level in the short term. Forex dealers said the euro falling to 1.3008 levels against the dollar and the US currency strengthening against major currencies overseas also put pressure.