Sensex breaks more than 450 pts; power, metal stocks sink

Mumbai, July 5 () BSE Sensex broke more than 450 points on Friday, dragged by energy, oil and gas, metal and energy meters, after the Budget proposal to raise the threshold of public participation aroused fears of enough liquidity to absorb the additional flotation of shares.

In presenting the Union Budget for 2019-20, Finance Minster Nirmala Sitharaman said it was the right time to consider increasing public participation from 25 percent to 35 percent.

In a highly volatile session, the index of 30 shares traded 458.94 points, or 1.15 percent, lower at 39,449.12 to 1330 hours. Similarly, the NSE Nifty of 50 shares declined 121.75 or 1.02 percent to 11.825.

The Sensex had claimed the 40,000 mark and the NSE Nifty moved closer to the 12,000 level in the morning before the Budget presentation.

With the exception of telecommunications, all sectoral indices on BSE were traded in red.

The main losers in the Sensex package included Yes Bank, NTPC, ONGC, TCS, Vedanta, Sun Pharma and Tata Steel, down to 5.40 percent.

On the other hand, IndusInd Bank, Bharti Airtel, HUL, Kotak Bank, SBI and Bajaj Finance increased to 1.76 percent.

Jagannadham Thunuguntla, Senior Vice President and Research Director (Wealth), Centrum Broking, said: While we must wait for Sebi regulations on how long these companies will be given to meet these minimum standards of public participation, the excess of this requirement the discharge of the developer's participation can have a significant impact on markets and specific actions.

However, many power supply units have not yet been able to meet 25 percent of the public participation standard.

The regulator must provide sufficient time to comply with this requirement so as not to flood the markets with the participation of the promoters, he added.

The Budget also proposed streamlining and rationalizing KYC standards for foreign portfolio investors to be investor friendly.

The finance minister said the government will provide a partial partial credit guarantee to public sector banks to buy qualifying joint assets of financially sound NBFCs.

Sitharaman also said that the government proposes to initiate steps for the electronic program of fundraising for the inclusion of social enterprises and voluntary organizations.

It also announced increasing the divestment target to Rs 1.05,000 crore in fiscal year 2019-20, compared to Rs 90,000 crore established in the interim budget.

The interoperability of the RBI depositaries and the depositories of SEBI is necessary for the smooth transfer of Treasury bonds, he said, adding that the government will take the necessary measures for the same. The rupee, meanwhile, witnessed a strong recovery to trade at 68.50 against the US dollar. ANS ABM ABM