Two hours after Finance Minister Nirmala Sitharaman's budget announcement speech, the markets reacted strongly. The BSE Sensex plunged 663 points to 40,059.92. The Nifty dipped 193 points at 11769.
This, after the Union Budget projected widening of fiscal deficit for the current financial year to 3.8% for FY20 from the target of 3.3%.
Major losers in the Sensex were Hero MotoCorp (down 4.15 per cent), L&T (4 per cent), SBI and ICICI Bank 3 per cent each and ONGC 2.75 per cent. Tata Steel was trading 2.63 per cent lower.
At 1.20 p.m., the Sensex was trading at 40,375.84, lower by 347.65 points or 0.85 per cent from the previous close of 40,723.49 points.
It had opened at 40,753.18 and has so far touched an intra-day high of 40,905.78 and a low of 40,375.84 points.
The Nifty50 on the National Stock Exchange was trading at 11,881.35, lower by 80.75 points or 0.68 per cent from its previous close.
The indices were largely flat during the early hours of trade and started to decline significantly around 1 pm.
The budget comes at a crucial time as the economy is going through a severe slowdown and consumer sentiment is significantly low.
The only gainers on the Sensex were Hindustan Unilever, Infosys, TCS and Nestle. The major losers were Larsen and Toubro, ONGC, Tata Steel, Hero MotoCorp and Power Grid.
"The issue of fiscal deficit has to be addressed in every Budget. The government has undertaken tax reforms for this. We estimate fiscal deficit at 3.8 per cent of GDP in FY20 and 3.5 per cent for Budget estimate FY21", Sitharaman said in her Budget speech.
The FM also spoke about the loss of substantial revenue in short term due to corporate tax rate cut. Last August, the government cut corporate taxes to 22.5% which cost the exchequer Rs 1.45 lakh crore.
With IANS inputs