The nation-wide Bandh against the spate of economic reforms disrupted normalcy in many states and also weighed on the markets as the Sensex closed 146 points lower at 18,349.25 (down 0.79 percent) and the Nifty closed at 5554.25, 45.80 points lower or down 0.82 percent).
The political drama between the government and its coalition parties escalated after Mamata Banerjee withdrew support from the government over differences in some of its reform initiatives, including the diesel price hike and FDI in retail.
Reuters
“From a political perspective, the markets have pretty much factored in the TMC moving out of the UPA. Right now, political calculations are based around whether the Samajwadi Party and the BSP will continue to support the government from outside and if so, for how long,” C Jayaram, Joint MD, Kotak Mahindra Bank told CNBC TV18 in an interview.
Even Edelweiss Securities agrees. “TMC’s pull-out from UPA-2 has reduced it to a minority, but we do not foresee the Govt falling in the near-term since BSP/SP are expected to continue support from outside. Indeed, in our view, TMC’s exit from government has actually created space for continuation of the reform process provided UPA-2 is able to manage the push and pull of BSP/SP,” it said in a note today.
Among other reforms, the central government is likely to hike dearness allowance from 65 per cent to 72 percent, benefiting about 50 lakh of its employees and 30 lakh pensioners.
Among the sectoral indices, only IT was up and the Metal, Oil and Gas, Capital Goods and Bank stocks took a major hit.
TCS, Infosys and ITC held up the market, while ICICI Bank fell 2.7 percent.
Stocks in News
Pantaloon Retail was down 2.94 percent concerns over FDI approval in retail sector.
United Breweries was down 2.91 percent after the company’s auditors warned of its exposure to Kingfisher Airlines.
Mahindra and Mahindra Finance, HPCL and Canara Bank were among the top gainers while TTK Prestige, GMR Infra posted losses.
