Day after new tax unveiled, Sensex plunges 800 points

BUDGET JITTERS Investors see a wealth erosion of more than ₹4.5 lakh crore MUMBAI:

Benchmark equity index BSE Sensex suffered its worst rout in more than two years today as the Budget proposals on taxing equities torpedoed investor sentiment.

The index tanked by 840 points -- its biggest single-day slump since August 24, 2015 -- while the broader NSE Nifty 50 tanked over 250 points to finish below the 10,800- mark. Investors saw a wealth erosion of more than Rs 4.5 lakh crore as stocks went into a free-fall.

The flagship Sensex crashed 839.91 points, or 2.34% to end the day at 35,066.75 as jittery investors slashed their portfolios.This is its biggest single session fall since August 24, 2015, when it had lost 1,624.51 points. The broader NSE Nifty cracked below the 10,800-mark by shedding 256.30 points, or 2.33%, to 10,760.60 at close. Intra-day, it hit a low of 10,736.10.

On a weekly basis, the Sensex declined 983.69 points, or 2.72 %, while the Nifty fell 309.05 points, or 2.79 %, snapping their eight week-long winning streak.

The Budget 2018-19 presented on Thursday imposed long- term capital gains tax of 10% on equities. points Investors will also have to pay 10% tax on distributed income from equity-oriented mutual funds.

Finance Minister Arun Jaitley also projected a fiscal deficit of 3.5 % of GDP for the current fiscal against the earlier target of 3.2 %.

Market mood suffered another setback today after Fitch Ratings said the high debt burden of the government constrains India’s rating upgrade.“Volatility in bonds and rupee over fiscal slippage and stocks’ churn ahead of FY19 over LTCG prompted sharp pull back in stocks. Uncertainties over the execution of spendthrift budget without tampering fiscal deficit target have fuelled the current volatility and may compel the RBI to take a more hawkish stance in the upcoming monetary policy meeting,” said Anand James, Chief Market Strategist, Geojit Financial Services.

Meanwhile, domestic institutional investors (DIIs) sold shares worth Rs 358.50 crore, while foreign portfolio investors net bought shares worth Rs 1,099.780 crore yesterday, as per provisional data.

Bajaj Auto was the worst per- former among the Sensex constituents today, falling 4.90%, followed by Bharti Airtel which was down by 4.62%.

Other losers were Axis Bank, Maruti Suzuki, Reliance Industries, Tata Steel, M&M, HDFC Ltd, ICICI Bank, Hero MotoCorp, Kotak Bank, L&T, SBI, Tata Motors, Yes Bank, Adani Ports, IndusInd Bank, NTPC and HDFC Bank, losing up to 4.28%.

All the sectoral indices ended in the red. Realty, infrastructure and power sectors registered the maximum losses.(3.37%). Broader markets too suffered a meltdown, with the small- cap index falling 4.65% and mid-cap index down 4.03%.

Uncertainties over the execution of spendthrift budget without tampering fiscal deficit target have fuelled the volatility and may compel RBI to take a more hawkish stance in the upcoming monetary policy meeting ANAND JAMES, financial expert