The fall of sensex post-budget is the second worst in 11 years
MUMBAI: capital investors lost close to Rs 3.2 lakh crore on Monday after the sensex It fell 793 points, the sharpest fall since October 2018. The index also posted its second worst post-budget performance in a decade, as markets expressed their disappointment over the government's decision to impose taxes on the repurchase of shares by of the companies.
Foreign investors in the portfolio left net sellers worried that a tax on the rich would also apply to FPIs, since they invest under the trust route.
In addition to the tax on repurchases and general negativity about the government's decision to increase taxes on the rich, global markets were affected after the strongest jobs data in the United States reduced the chances of a rate cut by the Federal Reserve of the United States. Emerging markets sentiment also dimmed after Turkish markets collapsed after the dismissal of its central bank governor.
The 30-share sensex tanked 907 points in the intra-day trade before settling at 38,720.6 points, showing a sharp loss of 792.8 points or over 2%. The broker Nifty of the NSE tanked 252.6 points, or 2.1%, to close at 11,558.6 points. The biggest post-Budget decline by the sense in the last decade was in February 2018, when the benchmark index closed 840 points lower.
According to analysts, the tax on the repurchase of shares will discourage companies from announcing the repurchase of their shares. They said that repurchases act as a safety net for the shares and add liquidity.
The massive sale of shares and fears of lower rate reductions by the US Federal Reserve. UU They caused the rupee to lose its three-day streak. The national currency was reduced in 24 countries to close at 68.66 against the US dollar.
Among Indian stocks, public sector banks were affected after National Bank of Punjab He classified Bhushan Power and Steel as a fraud. PNB shares closed down 11% after it accused Bhushan Power and Steel of a defaulting borrower of a Rs 3,800 crore.
HDFC Bank Shares closed down almost 3% due to concerns about a slowdown in loans, particularly in the consumer segment. Bajaj Finserv shares fell 10% after Sanjiv Bajaj noticed that demand was decreasing and television sales did not increase despite the Cricket World Cup.
In the last two sessions, the total erosion in market capitalization has been higher than Rs 5 lakh crore. The government's proposal for companies to increase public participation in at least 35% of their capital (by 25%) has increased the spectrum of capital dilution.
The market decline today was due to concerns about the flow of future funds in the secondary market and the revelations of scam in GNP. The increase in the budget surcharge will have an adverse impact on high-end consumption, as well as reduce the investment surplus of high-income people, whose money was the pillar of mutual funds, PMS and the medium capitalization segment . Fears of a prolonged deceleration in consumption also caused a massive sale in cars and NBFCs linked to the history of consumption, said Amar Ambani, president and head of research, YES Securities.