Markets fall 10 per cent in budget week; banks, infra, oil & gas drag

It was the worst weekly performance seen by the markets since October 2008; both the benchmark indices plunged nearly 10% each. Sharp cut in oil & gas, banking, infrastructure and realty stocks forced the Nifty to break the 4000 mark and the Sensex to test the 13,500 level during the last day of the week.

The first budget of the UPA government disappointed the street in the beginning of the week itself, monsoon worries dampened investors' spirits. The benchmark indices fell despite the improvement in the IIP (index of industrial production) numbers for the month of May 2009; wherein capital goods growth turned negative 3.6% versus positive 4.3% (YoY).

Ajay Srivastava of Dimensions Consulting said it would be hard to find a positive for the markets for the next six months considering the fundamental factors. He said, "If you look at the market scenario today, if you look at every fundamental factor, it will be hard to find a positive for the next 6 months, it is very difficult, whether its interest rates or company order book that we see in real life, retail buying everything is not looking so hunky dory as it was in March."

The markets were in consolidation mode since yesterday but selling in the last half an hour of the trade today took the Nifty below the 4000 level. The 30-share BSE Sensex touched an intraday low of 13,418.39, before closing the day at 13,504.22, down 1.84% or 253.24 points from the previous close. The 50-share NSE Nifty shed 77.05 points or 1.89%, to settle at 4003.90, after hitting a low of 3976.80. Atul Suri of Marathon Trends said the Nifty was likely to hit 3,600 if it broke 4,100.

All the sectoral indices closed in the red barring IT. The BSE IT Index surged over 2% led by the Infosys' Q1FY10 numbers, which were better-than-the-street-expectations. The company met rupee and dollar guidance; its margins also grew by 50 bps. However, the only concerns were rupee revenues guidance for Q2 and FY10. The stock gained 2.97%.

On the IT industry, Srivastava said the sector would be remain strained for the next 2-3 quarters as revenues from the US would continue to decline.