Investors lose over Rs 5 lakh cr in M-cap since Budget Day

Bears took control of D-Street for the second consecutive day in a row since Budget 2019 wiping out over Rs 5 lakh crore in terms of market capitalisation on the BSE in just two trading sessions.

Sensex and Nifty50 saw their worst fall in 2019, and worst single-day fall in 4 years. Sensex plunged nearly 800 points while the Nifty dived below 11,600 and took support near its 100-day exponential moving average placed near 11,534.

Indian markets that were already trading at elevated valuations witnessed a knee-jerk reaction after Budget 2019 proposed for a higher tax surcharge on foreign investors which spooked markets. Morgan Stanley’s downgrade of global equities also dampened the sentiment.

“The market fall today was on account of concerns over future fund flow into the secondary market and scam revelation at PNB. Hike in surcharge in the Budget will have an adverse impact on high-end consumption, as well as reduce the investible surplus of high-income individuals, whose money was the mainstay of mutual funds, PMSes and the midcap segment,” Amar Ambani, President & Research Head, YES Securities told .

“The increased surcharge also has a bearing on FPIs coming in through the Trust route and taxation of Cat-3 AIFs. This potentially reduces the post-tax attractiveness of India, vis-à-vis other markets, where such a high rate doesn’t exist,” he said.

In terms of sectors, the S&P Public Sector lost nearly 4 percent, followed by the S&P Capital Goods index that was down 3.7 percent, and the S&P BSE Realty index that fell 3.5 percent. The Nifty Bank was down 871 points or 2.77 percent.

On the broader market front, the S&P BSE Midcap index fell 2 percent while the S&P BSE Smallcap index was down 2.46 percent.

More than 300 stocks on the BSE hit their fresh 52-week low on the BSE including Maruti Suzuki, TVS Motor, KRBL, SMS Pharma, Nahar Spinning, Endurance Technologies, Hero MotoCorp, Eros Media, Phillips Carbon, Escorts, eClerx Services, HCL Infosystems, Castrol India, Sun TV and Glenmark Pharma, among others.

Stocks in News

PSU banking major Punjab National Bank (PNB) closed with loses of over 10 percent on July 8 after it detected an alleged fraud of more than Rs 3,800 crore by Bhushan Power & Steel Ltd (BPSL) and reported it to the Reserve Bank of India (RBI).

PNB said Bhushan Power & Steel Ltd misappropriated bank funds and manipulated its books of accounts to raise funds from consortium lender banks.

The share price of auto major Maruti Suzuki ended over 5 percent lower hitting a 2-year low after the company informed bourses that it cut vehicle production for the fifth consecutive month in June. The auto major said it slashed total vehicle production, including Super Carry LCV, by 15.6 percent last month to 1,11,917 units as compared to 1,32,616 units in the year-ago month.

Mindtree shares closed 10 percent lower on July 8 as leaders in management resigned after Larsen & Toubro acquired a controlling stake in the company. “Krishnakumar Natarajan, Executive Chairman, N S Parthasarathy, Executive Vice Chairman and Chief Operating Officer and Rostow Ravanan, CEO and Managing Director have submitted their resignations as members of the board of directors and as employees of the company,” the technology services and digital transformation company said in its BSE filing on July 5.

Yes Bank shares closed with gains of over 5 percent on July 8 after the private sector lender clarified about management stability and appointed two management leaders. The surge comes after it hit 5-year low of Rs 85.70 in the opening trade.

Global Update

Shanghai composite fell 2.58 percent to 2,933.36, while the Shenzhen component declined 2.72 percent to finish its trading day at 9,186.29. The Shenzhen composite also shed 2.898 percent to close at 1,554.80.

Hang Seng index dropped 1.66 percent and the MSCI Asia ex-Japan index also fell 1.42 percent. Nikkei slipped 0.98 percent to end its trading day at 21,534.35, while the Topix index shed 0.89 percent to close at 1,578.40. Kospi dropped 2.2 percent to close at 2,064.17.

Catch Budget 2019 LIVE updates here. Click here for full Budget 2019 coverage