Sensex plunges 587 points amid Absence of stimulus package, lack of clarity on FPI taxation
The benchmark indices lost over 1% each on Thursday, in the absence of any announcement of a fiscal stimulus by the Centre and lack of clarity on taxation issues raised by foreign investors, amid a weak global trend as well.
The 30-share Sensex lost 587.44 points, or 1.59%, to close at 36,472.93 as 26 of its constituents ended in the red.
Banking and auto stocks bore the brunt with Yes Bank, Tata Motors, Hero Motocorp, Bajaj Finance, State Bank of India, ICICI Bank and HDFC Bank among top losers.
The Sensex has now lost nearly 10% from the high of 40,312 it touched on June 4. The broader Nifty ended at 10,741.35, down 177.35 points or 1.62%. “First, while the measures on FPI (foreign portfolio investor) regulations are good, the market still awaits clarification on the tax proposals for FPIs made in the Budget.
“Second, the market is getting impatient with regard to the prospects of a stimulus package from the government and the comments made by some government officials have dimmed hopes,” said Vivek Ranjan Misra, head, Fundamental Research, Karvy Stock Broking.
Investor sentiment took a hit after Chief Economic Adviser Krishnamurthy Subramanian hinted that the government cannot be expected to intervene every time a sector goes through a ‘sunset’ phase.
Back in India, overall negative sentiment was corroborated by weak market breadth as more than 1,900 stocks lost ground as against only 511 gainers on the BSE. Provisional numbers showed that foreign investors continued to be net sellers at ₹903 crore on Thursday.
Elsewhere in Asia, the benchmarks of Hong Kong, Indonesia and South Korea also traded weak, with Japan’s Nikkei closing with a marginal gain of 10 points.
(With agency inputs)