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Business News/ Market / Stock-market-news/  Sensex slips below 19,000, recovers
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Sensex slips below 19,000, recovers

The benchmark index falls as much as 1.84% to 18,976.94, its lowest since 29 November

A file photo of the Bombay Stock Exchange. While blue chip stocks were hit by caution ahead of the Union budget, mobile operators rallied on expectations of a cut in airwave auction prices. Photo: Hemant Mishra/Mint (Hemant Mishra/Mint)Premium
A file photo of the Bombay Stock Exchange. While blue chip stocks were hit by caution ahead of the Union budget, mobile operators rallied on expectations of a cut in airwave auction prices. Photo: Hemant Mishra/Mint
(Hemant Mishra/Mint)

Mumbai: The BSE’s benchmark Sensitive Index (Sensex) slipped below the psychologically important 19,000 mark, weighed down by a drop in global markets and as investors turned nervous ahead of the Union Budget to be unveiled on Thursday.

Asian shares declined, tracking the overnight plunge in European equities, as political deadlock gripped Italy, the euro zone’s third largest economy, after an inconclusive election result that triggered fresh fears of a debt crisis in the region.

The 30-share Sensex fell as much as 1.84% to 18,976.94, its lowest since 29 November. It recouped some losses and closed 1.64% down at 19,015.14 points, its lowest close since 29 November. The National Stock Exchange’s 50-share Nifty closed 1.6% lower at 5,761.35 points.

Foreign funds have invested $8.3 billion in Indian shares so far in 2013, adding to $24.5 billion of net investments in 2012.

“Markets are just subdued ahead of the budget. I do not see much downside. Valuations look reasonable at this point in time," Sandip Sabharwal, chief executive of portfolio management services at Prabhudas Lilladher Pvt. Ltd, said in a phone interview.

Railway minister Pawan Kumar Bansal presented his first railway budget on Tuesday, and proposed that freight rates be linked to fuel prices in an attempt to pare losses. The market is waiting to see how finance minister P. Chidambaram manages to balance having to narrow the fiscal deficit without presenting an unpopular budget ahead of a general election next year.

“On the whole, there were no fireworks in the rail budget. While linking freight to fuel costs is the right move, subsidized passenger fares account for the bulk of rail losses, and until that is addressed, the financial position of the Railways is unlikely to turn around quickly, and investment in the sector will languish," Nomura economists Sonal Varma and Aman Mohunta said in a note on Tuesday.

Metal stocks led the decline with Tata Steel Ltd, Sterlite Industries Ltd and Hindalco Industries Ltd shedding between 1.8% and 4.5% on the BSE. The BSE Metal index fell 2.3%.

BSE’s oil and gas index shed 3.1% while the Capital Goods index declined 2.4%. “The mid-cap space is reeling under pressure. There was no big significant positive for railway stocks in there," Sabharwal said, explaining the decline in shares of railway-related companies.

Kalindee Rail Nirman (Engineers) Ltd and Texmaco Rail and Engineering Ltd shed 11.6% and 11.44%, respectively, while Titagarh Wagons Ltd declined 8.1%. The BSE Mid-cap index dropped 1.8%.

Jet Airways (India) Ltd fell 11.1% to 448.45 on worries over its stake sale to Abu Dhabi-based Etihad Airways PJSC, dealers said.

Investors are expecting the finance minister to present a pro-reform budget in Parliament on 28 February. “There is no scope for the finance minister to put up a populist budget this time. Populist measures may be seen trickling in the second half of the year, but right now the focus will be on setting the economic scene right," Sabharwal said.

The budget will be presented at a time when India’s economic growth for the year to 31 March is forecast at the slowest in a decade. Gross domestic product will rise 5% in the current fiscal, the slowest since 4% in 2002-2003, according to the government’s Central Statistics Office.

Earlier this month, Chidambaram said he was confident of achieving an economic growth rate of around 5.5% in the current fiscal. According to the finance minister, the economy has recovered from low-growth phases in the past—4.3% in 2000-2001 and 4% in 2002-2003.

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Published: 26 Feb 2013, 09:53 AM IST
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