Budget 2000 stops the party on the stock markets
Mumbai: Riding high on an infotech-led bull run, the party on the stock exchanges came to a grinding halt with the announcement of the Finance Bill by finance minister, Mr. Yashwant Sinha. The hopes of the market operators, who believed that the finance minister would match his words with deeds, were belied. The budget provisions wiped out a massive 294 points from the BSE Sensex, which closed at 5,447 as compared to its previous close of 5,741. The NSE S&P CNX index closed at 1,655, losing over 67.8 points in a day.

The killer amongst the various provisions that called a halt to the party at the stock exchanges was the doubling of the dividend tax to 20 per cent. This will definitely act as a damper for companies such as Reliance, which have traditionally been very generous in their dividend policy. Infotech and software stocks were hurt – though a little – by the introduction of a new tax. Fortunately, the software tax will be a slow killer, with the intention to bring software industry on par with domestic profits over a five year period. This would give the software companies enough time to re-adjust and re-align their business plans, it is felt.

Leading players in the market felt that the budget was a ‘non-starter’. Given this background, they feel that the markets would fall further during the week and the BSE sensex is likely to go below 5,000.

Senior officials of FIIs’ have been quoted in leading papers as saying that the government lost a golden opportunity to repair the damage to the economy and close the fiscal deficit .
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