The Sensex opened firm above 10300 and the Nifty also opened higher and held on to their gains till the budget proposals started trickling in. Both indices promptly gave up all their early gains and started drifting downwards.

By the time the budget presentation was over, both indices dipped sharply. The immediate trigger was the hike in securities transaction tax. Major losses in oil stocks, including ONGC, led to the sharp fall in the markets.

The markets recovered soon after as heavy buying was seen in some of the frontline stocks which are expected to benefit from the budget proposals. Stocks of engineering, auto, cement and FMCG companies rose sharply in afternoon trades.

The Sensex and Nifty recovered from their lows and posted new lifetime highs in afternoon trades. The Sensex went past the 10400 level comfortably and both indices closed the day at new lifetime closing highs.

The Sensex saw a new lifetime intra-day high of 10423 today and the Nifty recorded a high of 3090.

Sensex closed at 10370, a gain of 88 points, and the Nifty closed higher by 8 points at 3075. Nifty March futures closed at a discount of 5 points to the spot index.

BHEL was the biggest gainer among index stocks, gaining more than 5.5 per cent. The commitment to the mega-thermal power projects in the budget is expected to benefit the company significantly as it is the only PSU power equipment supplier.

Cement stocks were all the rage after the budget. Cement prices are on an upswing for the last couple of weeks and the renewed focus on infrastructure is expected to boost demand further.

ACC closed nearly 5 per cent higher while Grasim added close to 4.5 per cent.

Passenger car stocks were the other prominent gainers after the budget. The cut in excise duty is expected to boost demand. Maruti led the gains, closing more than 4 per cent higher. Tata Motors added close to 4 per cent.

FMCG stocks saw a decline immediately after the announcement but recovered fast as the benefits from some of the proposals were noticed by the markets. The reduction in excise duty on processed foods would benefit these companies in a big way.

ITC closed with gains of close to 4 per cent while HLL added over 2 per cent.

ICICI Bank, Tata Steel and Jet Airways were the other major gainers.

Oil stocks were among the biggest losers after the budget announcement. The reduction in import duty on hydrocarbons may lead to lower realisations for the oil marketing companies as their product prices are calculated on an import-parity basis. The increase in cess on domestic production of crude oil is a negative for ONGC.

HPCL lost close to 4 per cent and was the biggest loser among index stocks. BPCL gave up nearly 3 per cent while Indian Oil declined over 5 per cent.

ONGC gave up over 3.5 per cent and led to the under performance of the Nifty when compared to the Sensex.

The reduction in duty on certain critical drugs led to a decline for Ranbaxy, which closed nearly 3 per cent lower.

PNB gave up nearly 3 per cent as the expected tax breaks for long term bank deposits were not announced. SBI closed 1.5 per cent lower.

Tata Chemicals lost 2.5 per cent as the reduction in import duty on chemicals is a negative.

Aluminium stocks closed lower on reduction of import duty on non-ferrous metals. Nalco lost over 2 per cent.

MTNL gave up close to 2 per cent on the hike in service tax rate while SCI declined nearly 2 per cent on inclusion of ship management under service tax.

Mid-Cap Action
Mid-caps opened the day with decent gains, but declined along with the frontline stocks early in the afternoon. Though they recovered later in the afternoon the gains on the mid-cap index were lower than the frontline indices. The CNX Mid-Cap index gained 3 points to end the day at 4396.

The continuation of the revival package for the tea industry saw tea plantation stocks come back strongly. Most of the stocks in the sector closed the day locked in the upper circuit.

Harrison Malayalam and Williamson Tea closed at 10 per cent upper circuit while McLeod Russel and Williamson Magor ended at the 5 per cent circuit. BBTC added 12 per cent.

Stocks like Agro Dutch Foods, Heritage Foods and Agrotech Foods gained on the announcement of tax benefits for the food processing industry.

S Kumar Nationwide added 8 per cent on the cut in excise and custom duties for synthetic yarn.

Shrenuj & Co and Vaibhav Gems gained on the proposed tax restructuring for the diamond export industry.

Jindal Photo, Balkrishna Industries and Ansal Properties were among the other significant mid-cap gainers on the NSE.

Stocks of fertiliser companies lost substantially as there were no major announcements in the budget. These stocks had gained in recent days on expectations of some policies favouring the industry.

FACT, Chambal Fertilisers, GSFC and GNFC were among the major losers among fertiliser stocks.

Morarjee Realties, Calsoft and IBP were among the significant mid-cap losers on the NSE.

*Disclaimer:The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.