Rail Budget Fails To Cheer Stock Markets, Rupee Near Record Low

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Railway Minister Suresh Prabhu announced a 20 per cent hike in planned railway spending for 2016-17, but a big revenue miss this year disappointed stock markets. The BSE Sensex was on track for third day of losses, while the rupee slumped to 68.77 per dollar neat its all-time low. 

A slowdown in growth of passenger and freight revenues has put pressure on the railways' finances and raised doubts about Mr Prabhu's revenue target, analysts said. 

"The railways under achieved on freight and passenger targets... asking to grow at 10 per cent looks like a leap of faith," said market analyst Ajay Bagga. 

He described the rail budget as "incremental." 

Railway stocks underperformed despite higher capex announcement. The budget did not contain concrete plan to raise revenues for the Rs 8.5 lakh crore modernisation plan, spread over five years, analysts say. Freight rates and passenger fares were kept unchanged ahead of five state assembly elections. 

The railway budget comes days ahead of the announcement of the annual budget on Monday. Analysts say concerns that government will widen its deficit targets to boost economic growth have unnerved investors. 

Foreign investors have turned heavy sellers of domestic stocks this year, leading to pressure on both equities and rupee. In 2016, foreign institutional investors have been net sellers worth Rs 16,300 crore. 

As of 3 p.m., the Sensex traded 0.5 per cent or 106 points lower at 22,982, while the Nifty traded below the key 7,000 levels. The rupee was down 17 paise or 0.25 per cent at 68.73 per dollar.