Investor wealth sinks Rs 2.22 lakh crore on the day of the budget as the markets' tanks

NEW DELHI: Wealth of the investor eroded by Rs 2.22 lakh crore on Friday when the benchmark BSE sank 395 points in massive sales after the Budget proposal to raise public participation Threshold, which stoked fears about liquidity.

The index of 30 shares fell 394.67 points or 0.99 percent to close at 39,513.39.

Led by the fall of shares, the market capitalization of the companies listed in the EEB was Rs 2,22,579.67 crore to Rs 1,51,35,495.86 crore.

Presenting the Union Budget for 2019-20, finance minster Nirmala Sitharaman said it was the right time to consider increasing minimum public participation to 35 per cent from 25 per cent.

From the perspective of capital markets, the increase in the minimum participation requirement from 25 percent to 35 percent, although required in a country with limited free float, could create supply in the markets, limiting the rise, said Dhiraj. Relli, MD u0026 CEO, HDFC Securities.

If enough time is given to achieve this, then it can have a limited impact. However, the weight of India in MSCI and other global indices could increase after this, which would generate benefits in the medium term, Relli said.

From the package of 30 shares, 24 companies fell, with If bank Emerging as the best loser, falling 8.36 percent, followed by NTPC, Mu0026M and Vedanta.

"The big surcharge tax on high income group and possible squeezing of secondary market liquidity due to disinvestment and increased public participation is causing the stock market to fall today," Amar Ambani, president & research head, Yes Securities said.

"While we need to await Sebi regulations regarding how much time will be given to these companies to meet with this minimum public participation norms, the overhang of this requirement of off-loading of promoter shareholding can have significant impact on the markets and the specific stocks," said Jagannadham Thunuguntla, senior VP and head of research (wealth), Centrum Broking.

In BSE, 1,711 scripts declined and 770 scripted, while 127 remained unchanged.