Mumbai, July 8: The Sensex and the Nifty recorded their worst fall in 10 months today after the government failed to make any big-bang announcement in the rail budget.
The 30-share BSE Sensex slumped a massive 518 points to close at 25582.11, while the CNX Nifty tanked 164 points to 7808.85. The Sensex had plunged 651.47 points and the Nifty 209.30 points on September 3, 2013.
Experts warned that today’s crash was an indication of the huge expectations from the Modi government; if the Union budget fails to meet the Street’s expectations, one cannot rule out another such correction on July 10.
Many in the Street, however, agreed that the rail budget was a step in the right direction even as it missed out in the specifics or any major announcements.
“The budget was about operationalising legacy projects which were languishing as there was no focus on the execution of these projects. It was the absence of a big-bang announcement that led to a sharp correction in the equity markets. We believe the rail budget was a step in the right direction and the foundation has been laid for efficiency from the existing assets,” said Ritesh Jain, chief investment officer, Tata Asset Management Ltd.
Market circles said as equities had run-up significantly ahead of the budget, investors chose the opportunity to book profits in many counters.
Railway stocks took a hard knock today. These stocks had rallied in recent times on expectations that railway minister Sadananda Gowda might announce some ambitious projects. A relatively modest budget saw these scrips tanking today on profit selling.
Texmaco Rail Engineering crashed nearly 20 per cent, while the shares of Titagarh Wagons and Kalindee Rail ended lower by around 5 per cent each.
Selling was seen across-the-board as all the 12 BSE sectoral indices closed in the red.
Mid-cap stocks saw heavy losses because of unloading by retail investors and their indices underperformed the Sensex.
An analyst with a foreign brokerage, who did not wish to be quoted, however, said the markets might have over-reacted to the rail budget, which was pragmatic.