Markets sceptical about Economic Survey promises, end flat

The benchmark indices closed flat, after trading extremely volatile throughout the session today, ahead of the railway budget on July 3. The market witnessed a knee-jerk upmove just as the finance minister came out with the economic survey today. But later struggled to get past the 4,300 mark as realisation seeped in that the recommendations in the survey may be too ambitious to be actually implemented.

The sell-off in European markets also put pressure on the benchmark indices. The last hour of the trade witnessed high volatility. Metal, power stocks along with ONGC were the gainers while capital goods, banking, auto and telecom stocks along with Reliance Industries witnessed selling pressure.

The 30-share BSE Sensex closed at 14,658.49, up 0.09% or 13.02 points, after seeing a swing of 294.66 points between an intraday high of 14,764.35 and low of 14,469.69. The 50-share NSE Nifty witnessed swing of 94.25 points between a day's high of 4383.65 and low of 4288.75, before ending at 4348.85, up 0.18% or 7.95 points.

The Finance Minister Shri Pranab Mukherjee presented the Economic Survey 2008-09 today, which was largely focussed on divestment and suggestions like scrapping the commodities transaction tax (CTT), fringe benefit tax (FBT) and the securities transaction tax (STT). The survey also highlighted the need for a lot of fiscal reforms and also targets a zero fiscal deficit on a cyclically adjusted basis. It set a target of Rs 25,000 crore per year for disinvestment. The key points were: offloading at least 10% equity by listing unlisted PSUs and auctioning off loss-making ones.

There was a mixed trend in the oil & gas space. ONGC and GAIL were the star performers in today's trade, post the comments from Oil Secretary, RS Pandey, who said that only government would bear under-recovery on kerosene/LPG; upstream companies would not bear subsidy on cooking fuels while they would bear only auto fuel subsidy. Both stocks were up 7% and 7.9%, respectively.

The government hiked Petrol prices by Rs 4 per litre while diesel prices were up by Rs 2 a litre on Wednesday evening. Kerosene and LPG prices were left untouched. HPCL and IOC gained 1.5-2.7% while BPCL was flat.