Shares corrected sharply as introduction of long-term capital gains tax in the Union Budget disappointed investors. The barometer index, the S&P BSE Sensex, fell 888.41 points or 2.47% to 35,018.25, as per the provisional closing data. The Nifty 50 index fell 278.10 points or 2.52% to 10,738.80, as per the provisional closing data. The Nifty provisionally ended below the psychological 11,000 mark.
The introduction of the long-feared long-term capital gains, or LTCG, tax on stocks roiled investors. Investors were also miffed as the fiscal deficit target for FY2018 was extended to 3.5% of GDP in the Budget, from 3.2% pegged earlier. Negative cues from global markets also spoiled sentiment.
Overseas, European shares were trading lower as investors digested earnings reports. Most Asian shares declined. Japan's Nikkei 225 fell 0.69% after the Bank of Japan on Friday conducted a special bond purchase operation to stem the rise in Japanese bond yields.
US shares ended mostly lower on Thursday as fears of a pick up in inflation and rising bond yields spoiled sentiment. In US, the number of people who applied for unemployment benefits in late January fell by 1,000 to 230,000. Further, the productivity of American firms and workers fell at a 0.1% annual pace in the fourth quarter. Separately, the Institute for Supply Management said its manufacturing index in January slipped to 59.1% from 59.3% in December.
Closer home, the Sensex and the Nifty, both, hit their lowest levels in more than two weeks in late trade. The Sensex fell 900.25 points, or 2.51% at the day's low of 35,006.41 in late trade, its lowest intraday level since 17 January 2018. The Nifty fell 277.20 points, or 2.52% at the day's low of 10,739.70 in late trade, its lowest intraday level since 17 January 2018.
The broader market depicted weakness. The BSE Mid-Cap index slumped 4.07% while the BSE Small-Cap index tumbled 4.52%. Both these indices sharply underperformed the main barometer, the Sensex.
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The market breadth was quite weak. On BSE, 2,525 shares fell and 312 shares rose. A total of 125 shares were unchanged.
The total turnover on BSE amounted to Rs 5933.21 crore, compared with the turnover of Rs 5829.43 crore registered during the previous trading session.
Realty shares slumped. Anant Raj (down 11.93%), Peninsula Land (down 10.52%), Housing Development and Infrastructure (HDIL) (down 9.45%), Unitech (down 9.3%), DLF (down 9.09%), Indiabulls Real Estate (down 7.7%), Phoenix Mills (down 6.64%), Oberoi Realty (down 6.05%), Prestige Estates Projects (down 5.06%), D B Realty (down 5%), Mahindra Lifespace Developers (down 4.7%), Parsvnath Developers (down 4.63%), Sunteck Realty (down 3.11%), Sobha (down 2.74%), Godrej Properties (down 0.59%) and Omaxe (down 0.59%), edged lower.
Bajaj Auto fell 4.80% after the company declared Q3 result during market hours today, 2 February 2018. Bajaj Auto's profit after tax rose 3% to Rs 952 crore on 16% growth in turnover to Rs 6596 crore in Q3 December 2017 over Q3 December 2016. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 17% to Rs 1325 crore in Q3 December 2017 over Q3 December 2016. EBITDA margin stood at 20.6% in Q3 December 2017 helped by richer product mix. Bajaj Auto's consolidated profit after tax rose 4% to Rs 1013 crore in Q3 December 2017 over Q3 December 2016.
As on 31 December 2017, surplus cash and cash equivalents stood at Rs 13554 crore as against Rs 12699 crore as on 30 September 2017. Bajaj Auto reported 46% surge in total sales to 3.53 lakh units in January 2018 over January 2017. Bajaj Auto's domestic sales rose 50% to 2.02 lakh units in January 2018 over January 2017. Exports rose 41% to 1.5 lakh units in January 2018 over January 2017. The announcement was made before market hours today, 2 February 2018.
Hindalco Industries dropped 2.90% after the company announced Q3 results during market hours today, 2 February 2018. Hindalco Industries' net profit rose 17.5% to Rs 376 crore on 11.17% rise in revenue from operations to Rs 11023 crore in Q3 December 2017 over Q3 December 2016.
PC Jeweller slumped 24.44%, with the stock extending recent strong losses. PC Jeweller issued clarification during market hours today, 2 February 2018, that it is not aware of reason of sudden decrease in price of shares today, 2 February 2018. The company continues to witness very good footfalls and sales in the current quarter as well, it added. None of the promoters diluted their stake in the company and none of their shares are pledged as collateral with any institution, it added. The company said that fundamentals of the company remain strong. The company is moving ahead as per the paid down business plans of opening new stores and working on launching new collections.
On the economic front, the Union Minister for Finance and Corporate Affairs Arun Jaitley while presenting the Union Budget 2018-19 in Parliament yesterday, 1 February 2018, reintroduced LTCG tax. Investors will have to pay 10% tax on profits exceeding Rs 1 lakh made from sale of shares or equity mutual fund units held for over one year. However, all gains up to 31 January 2018 will be grandfathered. Finance minister also proposed to introduce tax on distributed income by equity oriented mutual funds at the rate of 10%.
The major takeaways from the Budget were infrastructure boost, benefits to marginal farmers, extending corporate tax rate cut to Micro, Small & Medium Enterprises (MSME), and encouraging rural spending. Jaitley set disinvestment target of Rs 80,000 crore for 2018-19. The government revised the deficit target for the year ending in March 2018 to 3.5% of gross domestic product (GDP). The fiscal deficit target for 2018-19 was pegged at 3.3% of the GDP to accommodate higher demand for expenditure.
The government is firmly on course to achieve high growth of 8% plus as manufacturing, services and exports are back on good growth path. While GDP growth at 6.3% in the second quarter of 2017-18 signalled turnaround of the economy, growth in the second half is likely to remain between 7.2% to 7.5%.
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