Mumbai: Indian shares extended losses to 1% on Thursday afternoon as investors worried over the government’s high fiscal deficit and need for sweeping reforms, outlined in an economic survey.
The survey released by the government ahead of Monday’s budget said India’s fiscal deficit ballooned to 6.2% in 2008/09. Faster economic growth was possible if infrastructure development was accelerated, it said.
At 1:17pm, the 30-share BSE Index was down 1% at 14,497.25 points. The 50-share NSE index was down 1.06% at 4,295 points.
Initially the stock markets cheered the recommendations in the Economic Survey with the Sensex rebounding by over 115 points on fresh buying in heavyweight stocks.
The Bombay Stock Exchange benchmark index, which fell by over 70 points in late morning trade, rebounded by 118.88 points to 14,764.35 points soon after the Survey was tabled in Parliament by finance minister Pranab Mukherjee.
Meanwhile, the wide-based National Stock Exchange index Nifty moved up by 42.75 points to 4,383.65 points.
Marketmen said trading sentiments got a boost following the Survey recommended phasing out all cesses and surcharges on taxes and securities transaction tax, fringe benefit tax and introduce a new income tax code.
The Survey also asked for rationalising the dividend distribution tax so that dividend is taxed in the hands of receiver. Surcharge at a rate of 10 per cent is levied on those earning at least Rs10 lakh per annum and corporate income tax.
Besides, stocks of companies in oil refining business were in demand following a hike in diesel and petrol prices last evening.
The BSE benchmark Sensex wiped off its early gains and fell by 16 points at 10:15am ahead of the presentation of the survey during the day amid a hike in fuel prices and mixed trend in Asian stocks.
The 30-share index was quoted lower at 14,629.83 points at 10:15am, a loss of 15.64 points over its previous close. The Sensex opened higher by 95 points today.
Oil PSU stocks attracted fairly heavy buying after the government’s decision to hike petrol and diesel prices by about 10%.