Domestic equity markets settled with modest gains on Wednesday as the Union Budget 2023 euphoria fizzled out after Credit Suisse stopped accepting bonds of Adani Group for margin loans to its private banking clients. Benchmark indices took a surprise U-turn from the day's high ahead of the US Fed's policy meeting.
The route in Adani Group stocks intensified in the fag-end of the session as Credit Suisse has assigned a zero-lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai, according to a Bloomberg report.
Adani Group stocks continued to remain in the headline even on the big budget day as the Adani Group's flagship firm Adani Enterprises tanked up to 35 per cent, whereas Adani Ports and SEZ tanked up to 25 per cent during the session, only to recover slightly. They settled 28 per cent and 20 per cent lower for the day.
Other Adani Group stocks including Ambuja Cements and Adani Total Gas plunged 10-17 per cent, whereas ACC, Adani Transmission, Adani Green Energy, Adani Power, NDTV and Adani Wilmar dropped 2-5 per each. Adani Group stocks have been on a free fall since short-seller Hindenburg Research brought out a report against Gautam Adani-led conglomerate.
For the day, the 30-share pack BSE Sensex gyrated in the range of 2,000 points but settled on 158.18 points or 0.27 per cent higher at 59,708.08. However, Nifty50 Index shed 45.85 points or 0.26 per cent to close at 17,616.30 for the day. BSE midcap and smallcap indices settled a per cent lower, while India VIX eased about a per cent to 16.78-level.
Markets were volatile and Sensex gyrated nearly 2,000 points intra-day. However, at one point during the Budget presentation, benchmark index had vaulted nearly 1,200 points but a rout in the Adani group stocks and nervousness ahead of the important Federal Reserve meet on interest rate punctured the rally and saw the index end mixed, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
"Technically, the Nifty has formed a long-legged Doji candlestick on the daily chart, which is indicating an indecisive trend. Now 17,750 will act as a resistance and below the same the index may retest 17,400-17,350 levels. On the flip side, above 17,750 we can see a continuation of a pullback rally till 17,850-17900," he said.
On a sectoral front, only Nifty IT and FMCG indices settled with gains, rising a per cent each. Nifty PSU Bank index plunged 6 per cent, followed by a 5 per cent fall in the metal index. Media index dropped 3 per cent whereas realty and auto stocks shed a per cent each.
AR Ramachandran, Co-founder & Trainer, Tips2trades said, "A new personal income tax slab with tax rebate up to Rs 7 lakh and expected focus on education, agriculture and infrastructure sectors coupled with no unpleasant surprises on LTCG or STCG is a very positive sign for the markets. This should help the major indices Nifty & Sensex to recover well from here onwards. "Despite the new personal income tax slabs revised during the Budget 2023, Nifty & Sensex had a disappointing day due to an intraday crash in all the life insurance stocks. With life insurance policies also seen as a tax saving mechanism, unless further clarity is provided by the Finance ministry regarding important tax deductions, savings mentality among investors could take a severe hit thereby impacting demand for the life insurance sector."
Barring the Adani Group stocks, HDFC Life Insurance and SBI Life Insurance tanked 11 per cent and 9 per cent, respectively. Bajaj Finserv and State Bank of India dropped 5 per cent each, whereas IndusInd Bank was down 4 per cent.
Among the gainers, ICICI Bank, JSW Steel, ITC, Tata Steel and Britannia jumped 2 per cent each, whereas Cipla, HDFC Bank, Tata Consumers, Eicher Motors and HDFC were up a per cent each.
"Well-tuned budget with a strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting, said Vinod Nair, Head of Research at Geojit Financial Services.
"Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool," he added.
In the broader markets, Monarch Networth Capital, General Insurance Company, ICICI Prudential Life, Raymond and plunged 10-19 per cent each. Among the gainers, Manaksia rose 18 per cent, whereas Apar Industries gained 15 per cent. Indian Hotels Company and EIH Hotels jumped up to 9 per cent for the day.