It was a rollercoaster ride for Dalal Street participants on Monday with the market swinging between gains and losses during finance minister Arun Jaitley’s Budget speech. Indices recouped most of their losses after Jaitley’s assurance on bringing fiscal deficit down sparked a rally in bonds on hopes of an immediate rate cut by the Reserve Bank of India (RBI). BSE Sensex closed the day 152.30 points, or 0.66%, down at 23,002 after falling as much as 660 points, or 2.8%, to 22,494.61 earlier in the day. NSE Nifty fell 42.70 points, or 0.61%, to close at 6,987.05 after hitting day’s low of 6,825.80. Jaitley’s decision to stick to the fiscal deficit target, along with proposed infrastructure spending, also triggered a rally in the Indian rupee, which strengthened 21 paise, or 0.31%, to close at 68.41 against the US dollar on Monday. Fund managers said the market is unlikely to run up in a hurry unless the turmoil in global markets settles. Volatility Index (Vix) — a measure of options traders’ expectations of nearterm market risks based on options prices of Nifty — fell 7.8% on Monday, showing the uncertainty has ebbed. Benchmark government bond rallied, with yields at close falling to 7.62%, the level seen four months ago, against 7.81% on Friday, as traders rushed to buy securities after the Budget allayed market apprehension over fiscal slippages and higher government borrowings. “With lower borrowing programme and fiscal consolidation, there is hope the RBI may cut interest rates, which will be a positive,” said Harsha Upadhyay, chief investment officer at Kotak Mahindra Asset Management Company. The government has set a fiscal deficit target of 3.5% in 2016-17, lower than the market estimates of 3.6%. Piyush Wadhwa, head of trading, financial markets group, at IDFC Bank, said a rate cut may come either in the April policy or even before that. Foreign investors, however, seemed to be indifferent to expectations of a rate cut, dumping shares worth Rs 2,000 crore on Monday. This included a block deal in Axis Bank shares worth Rs 870 crore. Investors were relieved that the government refrained from tightening long-term capital gains tax norms in the Budget as was feared, but were disappointed with the amount set aside for recapitalisation of public sector banks. “The key negative is there was no broad plan to reform the state-run banks,” said Shiv Puri, managing director of Singapore-based TVF Capital Advisors. Bank stocks, however, ended higher as hopes of a rate cut outweighed worries about lower-than-expected recapitalisation fund for stateowned lenders. The Nifty PSU Bank Index closed 0.8% higher after falling 2.2% earlier in the day. Fund managers said the Budget announcements are unlikely to impact markets beyond the near-term and investor focus will shift back to global events. “Indian equity markets have now moved from a ‘benefit-of-doubt’ to a ‘show-me’ mindset and so, no matter what was said in the Budget, any sustained movement in the markets will happen only when fundamentals start improving,” said Puri. “The markets are going to move past this Budget very quickly, and be subject to global conditions,” he said.