Rail Budget fails to cheer the market mood

The populist rail budget for 2010-2011 presented by Rail Minister Mamata Banerjee failed to enthuse investors and marketmen and stocks across the board snapped the last two days gains and closed lower than their previous levels in a choppy trading session in which nearly 65 per cent of stocks declined as compared to advance of 33 per cent.

The benchmark BSE Sensex closed down by 30.35 points at 16,255.97 after touching an intra day low of 16187.44, while the NSE Nifty closed down by 11.45 at 4858.60 level from its earlier day closing of 4870.05.

Interestingly the negative mood on the rail budget was evident from the fact that even traditional railway budget sensitive stocks like Titagarh Wagons, Kernex Microsystems, Texmaco, Kalindi Rail Nirman etc lost substantially. Titagarh Wagons closed at Rs 378.30 with a loss of 6.66 per cent, Kernex was down by 5 per cent to close at Rs 151.75, Texmaco closed at Rs 142.25 with a loss of 5 per cent while Kalindi Rail also lost 5 per cent to close at Rs 183.50.

Commodity stocks however recovered from early lows since freight rates unchanged in the railway budget 2010-11 and cement stocks like ACC, Ambuja Cements and Ultratech Cement managed to remain in the green.

Commenting on the rail budget’s impact on markets, Anand Rathi, CMD of Anand Rathi Securities said that the rail budget had nothing in particular for the industry and thus it turned out to be a complete non event for the markets. “Except for the fact that freight rates have not gone up and the unexpected reduction in freight of food grains and kerosene by Rs 100 per wagon there was nothing too weighing on the industry. I think, the little fillip that the rail budget could have given to the Union Budget was missing and now all eyes on the Finance Minister for the markets to take any directions,” he said.

According to investment expert Pawan Gupta small investors should be very cautious before they take any position before or on the budget day. “Investors must not get swayed away by various recommendations and analysis on the budget day, since it will take a couple of days to sink in the real impact,” he advised.