The Telegraph
Friday , July 11 , 2014
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Portugal rains on Jaitley’s parade

Mumbai, July 10: The BSE sensex ended on a lower note on Budget Day but a European factor, not Arun Jaitley, is being held responsible.

The market circles gave the thumbs-up to the budget but the sensex closed the day with a loss of 72 points at 25372.75, which was blamed on disappointing news from Portugal’s largest listed bank.

Espirito Santo Financial Group, the largest shareholder in Portugal’s Banco Espirito Santo, suspended trading in its shares and bonds, citing “material difficulties” at the parent company. The suspension raised questions about the strength of the peripheral Europe recovery although some analysts felt that the markets might have overreacted.

The development capped a volatile and eventful session on the Indian stock markets, too. The sensex oscillated in a range of more than 800 points.

The index began on a marginally higher note at 25513.74 but investors offloaded stocks after it became clear that Jaitley was not repealing the retrospective tax immediately. The sensex hit an intra-day low of 25117.00, a drop of 327 points.

The mood reversed towards the latter half of Jaitley’s speech where he spoke of a relaxation for foreign portfolio investors (FPIs) and real estate players. Equities recouped losses as he completed the speech and the sensex soared over 475 points to hit the day’s high of 25920.46.

However, just when the markets thought that the index had broken the jinx that has been seen in the past five of the eight budgets where it has ended lower, Europe struck.

The bank alert pulled the sensex down by 72 points, or 0.28 per cent, to 25372.75. The wide-based 50-issue CNX Nifty of the NSE also eased by 17.25 points, or 0.23 per cent, to end at 7,567.75.

“First things first. The correction in market in the last leg of the trading session was more on account of global news flows about a possible default by the biggest Portuguese bank. It had nothing to do with budget announcements,” said Arvind Sethi, managing director and CEO of Tata Asset Management.

Other market analysts had a word of praise for Jaitley. “The budget may not be big bang. But the crucial thing is that there is no negative news in it. Jaitley has to be commended for the fact that he gave a good maiden budget within such a short time. One can expect a visionary budget next year,” a senior official at a foreign brokerage said.

He added that with a major event now out of the way, the markets will focus on the results season which will see Infosys declaring its first quarter numbers on Friday. The investors are also expected to keen on eye on news from Europe.