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At least 30 PSUs and 170 private firms will have to divest promoter holdings in a phased manner.

Finance Minister Pranab Mukherjee termed the move as the government's bid to increase "people's participation" in listed companies. As a consequence, at least 30 public sector enterprises and 170 private companies will have to divest their promoter-holdings in the near future.

The Budget today proposed to increase the non-promoter stake in listed companies, but was silent on the threshold. In 2008, the government had put out a draft proposal under the Securities Contract and Regulation Act (SCRA) recommending that all listed companies should be told to ensure a minimum public holding of 25 per cent in a phased manner.

Today's move, however, evoked mixed reactions. Deven Choksey, MD, K R Choksey Shares and Securities, said the government was trying to target incremental growth as bringing down promoter holding in companies, especially public sector units, will bring in more money into the markets. There would not be any negative impact on markets as this was a long drawn process and would increase the depth in the markets, Choksey said.

The government holds more than 90 per cent stake in State Bank of Mysore, Ircon International, Hindustan Copper, MMTC, HMT, NMDC, F A C T, National Fertilizer, Andrew Yule & Co, Neyveli Lignite, RCF, STC and Engineers India. So these companies will be on top of the divestment list.

A Balasubramaniam, CIO, Birla Sunlife Mutual Fund, said the move would increase the floating stock of companies, which, in turn, will lead to better price discovery of stocks. This would also increase FII participation in the market as foreign investors will be more confident to invest.

In general, however, marketmen were disappointed as there was nothing specific to cheer about. The broking community was eagerly awaiting removal of the Securities Transaction Tax. Also, the Budget's silence on the banking sector, insurance, and even on housing finance sops has been taken as a big negative.

That foreign investors were unhappy with the Budget was evident from the fact that they were net sellers to the tune of Rs 1,483.03 crore today, according to provisional data on the National Stock Exchange.

Domestic institutional investors bought equities worth Rs 815.71 crore.