Stock markets have reacted negatively to the Budget 2009. Nifty has crashed more than 250 points to close at 4150. Why this big crash? The markets had priced in significant positives from the budget and reacted likely due to the following reasons :
1.Increase in the fiscal deficit and accompanying fears of interest rates.
2.Absence of relaxation / allowance of FDI limits.
3.Lack of concrete targets on disinvestment.
4.Increase in MAT rate to 15%, which is a clear negative.
Though the budget has done whatever needed for the sustenance in growth rates of the economy, the fiscal deficit target is higher.
Budget impact on sectors.
Positive impact – FMCG and IT.
Negatvie impact – Banking,Cement, Fertilizer, Media, Real Estate, Retail,Textiles.
Post the correction,markets is set to focus on the evolving fundamentals of the economy and the corporate sectors and factors like monsoons, quarterly results, inflation and economic growth. In the medium term, the markets lack any triggers and the direction could reflect the movement in international markets.Technically market has support around current levels, and below which, the next support is at 4000/3850.