Post Budget Analysis of 2011 - FROM THE DESK OF RESEARCH

rnIt turned out to be a roller-coaster ride for the frontline indices which zoomed over three percent in today's session but finished the day with moderate gains of around half a percent. The Union Budget 2011-12 had a surfeit of positives including retention of excise duty and service tax at 10%, a lower than forecasted fiscal deficit target of 4.6% for FY12, more spending power to consumers through an increase in income tax exemption limit, and permission for foreign investors to invest in Indian mutual funds. The positives led to around a 600 point short covering rally but the jubilation met with strong resistance at crucial 18,300 levels which eventually resulted Uturn for the 30 share benchmark. Weak start for the European counterparts along with towering crude oil prices over fears of supply disruption in the wake of the political turmoil in West Asia, limited the upside for the indices. The NSE's 50-share broadly followed index, Nifty climbed around half a percent a n d settled below the crucial 5,350 level while the Bombay Stock Exchange's Sensitive Index, Sensex managed to hold on to the psychological 17,800 mark. The broader markets continued their run of inderperformance against their larger peers for yet another day as the BSE's midcap and smallcap indices went home with moderate gains of 0.31% and 0.36% respectively. The FMCG counter on the BSE sectoral space settled as the top gainer as it rallied 4.47% underpinned by ITC, the FMCG major, which skyrocketed 8.23% in the absence of any excise duty hike on cigarettes and other tobacco products. The Public sector Undertaking (PSU) pocket too witnessed huge buying interests as it surged 2% on the back of 12.42% spurt in Coal India after the company opined that it would get $1.4 billion in additional revenue and realizations will go up 12.5% to 13% in the next fiscal year as the firm hiked prices by 30%. The healthcare pack on the other hand remained the only laggard in the space as it settled with loss of 0.04% after stocks of companies like Glenmark Pharmaceuticals and Ranbaxy plummeted 10.20% and 3.59% respectively. Index heavyweight Reliance Industries failed to make its presence felt as it settled with marginally losses on the BSE after erasing all early gains due to profit-booking amid a volatile broader market. While the tension in Middle East was still prevailing, the markets were trapped in the double whammy of F&O series expiry and there were hardly any trigger on the domestic front that could help the markets