Union Budget 2014-15: Budget below market expectations

The Narendra Modi government's maiden budget offered little incentive for a bull-led share market to extend an ongoing rally, in the absence of big-bang reforms, and the benchmark Bombay Stock Exchange index closed 72 points down at a near-two week low.

The small measures that finance minister Arun Jaitley unveiled in the budget are viewed by investors as small steps in the right direction rather than game-changing policy shifts.

The Bombay Stock Exchange's benchmark index, the Sensex, which rallied to new highs over the past few weeks, reaching above 26000 levels in anticipation of a business-friendly budget, fell as much 0.3 per cent or 72 points to close at 25,372.75 on Thursday - the lowest since the 25,099.92 level hit on 27 June.

The benchmark Sensex fluctuated wildly as investors grappled with the budget's fine-print. Shares dipped and climbed again during the government's budget presentation as fears over social spending gave way to relief over tax incentives. But the market ended the day with losses as investors ultimately found little to cheer.

The market had earlier made gains of about 64.08 points or 0.25 per cent around 9.20 am as automobile, capital goods and consumer durable stocks surged.

Intra-day, the index swung over 800 points as investors resorted to alternative bouts of buying and selling.

Among 30-Sensex constituents, 17 ended lower while 13 finished higher. Major losers were SBI (1.31 per cent), ICICI Bank (0.88 per cent), Axis Bank (0.78 per cent), HDFC Ltd (0.16 per cent), HDFC Bank (0.65 per cent) and Bharti Airtel (1.71 per cent). Bajaj Auto (0.80 per cent), Hero MotoCorp (3.99 per cent), Mahindra and Mahindra (1.44 per cent), Tata Motors (0.89 per cent) and TCS (2.06 per cent) also ended lower, provisional data show.

The broad-based National Stock Exchange index Nifty shed 17.25 points, or 0.23 per cent, to close at 7,567.75. It had dipped below the 7,500 mark to touch day's low of 7,479.05. Intra-day, it climbed to 7,731.05 during a volatile session.

The announcement of real estate investment trusts and infrastructure investment trusts, which could open a new avenue of funding for developers realty index helped drive up realty stocks. The BSE realty was the biggest gainer among the 12 sectoral indices.

Jaitley also announced a number of tax incentives for conventional and renewable power companies, including 10-year tax breaks to power generation, transmission and distribution companies that start operating before 31 March 2017.

This boosted the shares of power companies such as Tata Power and Suzlon Energy by 2 per cent -3 per cent. Tata Power was the second-biggest gainer on the Sensex.

Analysts said an increase in income tax deduction limits could also mean more money flowing into equity markets by giving households more income. On average, Indian households invest about 2 per cent of their assets in equities and put nearly 50 per cent in bank deposits.