The gains in India's stock markets are underwhelming given the fact that global risk appetite has improved and Asian peers are near a four-month high.
Companies that would benefit from higher demand, thanks to the many sops announced in the budget for the rural areas and the middle class, did not attract buyers. Stocks in the fast moving consumer goods (FMCG), healthcare and auto stocks witnessed heavy selling pressure.
"While the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further," Gene Fang, from global ratings agency Moody's, reportedly said.
There are others who also fear that the finance ministry may be underestimating the deficit- the excess of expenditure over the earnings. "Market is fearing a fiscal slippage because of various announcements in the Interim Budget, like the higher borrowing programs by the government," Rusmik Oza, Head-Fundamental Research, Kotak Securities, told IANS.
If indeed the fiscal deficit is more than what the government has projected, it would weaken the rupee, make imports costlier and push up inflation.