Fight on D Street: Sensex accumulates 988 points in the biggest budget day fall
Finance minister disappointed Dalal Street Investors with their second Budget, since it changed the burden of corporate dividend tax on recipients that will harm promoters, did not yield to expectations of abolishing the long-term capital gains tax on shares and increased the fiscal deficit targets that are expected to keep the interest rate at a high level. As a result, the sensex crashed 988 points, the biggest drop in points from a single session on a Budget day, closed at 39,736, a three-month low. The sharp drop of the day in the market also left the poorest investors for Rs 3.5 lakh crore with the market capitalization of BSE now at Rs 153 lakh crore.
In the session on Saturday, the HDFC group was the most affected since market players say it is a difficult time for companies in the financial sector if the interest rate is still difficult. In addition, insurance and companies were affected by FM's proposal to eliminate IT exemptions for people in favor of lower tax rates. HDFC, ITC, ICICI Bank and HDFC Bank contributed more to the fall of the sensex, while the highest close for TCS, HUL and dampened the fall marginally.
However, the FM changed some rules that are expected to excite foreign funds to invest in India. According to Rashesh Shah, president and CEO of Edelweiss Group, the FM has sent a very positive signal to foreign investors through exemptions to sovereign wealth funds to invest in infrastructure and the abolition of the dividend distribution tax, to reaffirm their faith in India growth story ”. Institutional traders also feel that with central banks willing to inject cash to revive a slowdown in the global economy, IPFs are expected to continue buying India's history.