In highly volatile movements, the BSE benchmark Sensex on Friday plunged nearly 210 points as the government’s budgetary proposals to raise taxes dampened the market sentiment, even as global stock markets were firm.
Sensex saw the day’s high of 17,871 but fell as Finance Minister Pranab Mukherjee unveiled the Budget 2012-13 and closed 209.65 points, or 1.19 per cent down at 17,466.20.
Refinery, power and heavy machinery suffered big losses.
National Stock Exchange index closed 62.60 points, or 1.16 per cent down at 5,317.90.
Brokers said a nominal cut in securities transaction tax (STT) and hike in service tax prompted to sell.
They said the proposals to mop up more taxes to reduce the fiscal deficit hurt investor sentiment as the market was looking for much more, including the abolition of STT.
“Accelerating taxes might reduce the deficit but make things costlier for general public and corporates, with cascading impact on inflation and consumer demand,” said Delhi-based broker Rajiv Malik.
The slide was led by Sensex heavyweight Reliance Industries that dipped 3.27 per cent. ONGC fell 4.66 per cent.
Banking stocks — SBI, Bank of Baroda, Bank of India and Punjab National Bank — also fell as investors felt that the proposals of Rs. 15,888 crore for recapitalisation of PSU banks would not be enough.
ITC, however, closed in the positive zone — up 3.65 per cent after lower-than-expected hike in excise duty on cigarettes.
Auto sector stocks of Maruti Suzuki and Mahindra and Mahindra rose as the companies decided pass on the hike in excise duties to customers.