Key benchmark indices dropped on first trading day of the week after Prime Minister Narendra Modi on Saturday, 24 December 2016, hinted at increase in taxes on income from stock market. The barometer index, the S&P BSE Sensex, lost 233.60 points or 0.9% to 25,807.10, as per the provisional closing data. The Nifty 50 index lost 72.75 points or 0.91% at 7,913, as per the provisional closing data. The Sensex provisionally settled below the psychological 26,000 mark, after sliding below that level at the onset of the day's trading session. Key indices remained in negative zone throughout the trading session. Realty stocks suffered sharp losses.
After opening lower, the key benchmark indices lost ground quickly, as the market reacted to statements made by Prime Minister Narendra Modi on Saturday, 24 December 2016, hinting at increase in taxes on income from stock markets. Later, indices staged a recovery in afternoon trade which was derailed by fresh selling in late trade.
The Sensex hit 5-week low while the Nifty hit its lowest level in seven months. The Sensex had slumped 286.96 points or 1.1% at the day's low of 25,753.74 in morning trade, its lowest level since 21 November 2016. The index fell 32.13 points or 0.12% at the day's high of 26,008.57 at the onset of the session. The Nifty lost 91.95 points or 1.15% at the day's low of 7,893.80 in morning trade, its lowest level since 25 May 2016. The index fell 15.70 points or 0.2% at the day's high of 7,970.05 at the onset of the session.
However, Finance Minister Arun Jaitley clarified on Sunday, 25 December 2016 stating that media reports of Modi's speech are erroneous, adding further that the government has no plans to introduce long-term capital gains tax on share transactions.
The side counters continued their recent drubbing. The BSE Mid-Cap index provisionally fell 2.17%. The BSE Small-Cap index provisionally fell 2.1%. The fall in both these indices was higher than the Sensex's decline in percentage terms.
The broad market depicted weakness with over three losers against every gainer on BSE. 2,013 shares fell and 582 shares rose while a total of 180 shares were unchanged.
The total turnover on BSE amounted to Rs 1848.38 crore, lower than turnover of Rs 2402.87 crore registered during the previous trading session.
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Cipla (down 5.02%), Lupin (down 3.19%) and Tata Steel (down 2.48%) were the major losers from the Sensex pack.
Realty stocks declined. DLF (down 7.58%), Indiabulls Real Estate (down 1.21%), Housing Development and Infrastructure (down 6.64%), D B Realty (down 3.72%), Godrej Properties (down 0.78%), Prestige Estates Projects (down 2.43%), Oberoi Realty (down 2.54%), Unitech (down 0.49%) and Sobha (down 0.44%) fell.
Divi's Laboratories fell 12.13% to Rs 761, extending Friday's slump triggered by media reports of adverse observations from the US drug regulator made on its Vizag facility in Andhra Pradesh. Shares of Divi's Laboratories slumped 21.87% to Rs 866.10 on Friday, 23 December 2016, following media reports of adverse observations from the US Food and Drug Administration (USFDA) made on its Vizag facility in Andhra Pradesh. Divis Laboratories is in the process of replying to the observations raised by USFDA. Due process of reply to these observations requires Divis Laboratories to respond in detail and this is being done in time, the company said in a response to the clarification sought by the stock exchanges on the steep fall. These observations have not impacted the company's operations, the company added. USFDA inspected the Unit-2 plant from 29 November 2016 to 6 December 2016 and issued a Form 483 with five observations pertaining to breaches in data integrity, improper controls and violations of current good manufacturing practices (cGMP). The company issued the clarification after market hours on Friday, 23 December 2016.
Overseas, Asian stocks settled on a mixed note in light trading amid most Asian markets remaining closed on account of Christmas. All the major European stock markets, many Asian markets including Hong Kong, Australia, Singapore, Indonesia and Malaysia, and the stock markets in the US are closed today, 26 December 2016 in observance of Christmas holiday.
US stocks ended a thinly traded session higher on Friday, 23 December 2016 boosted by healthcare companies. In the latest economic data, new home sales rose 5.2% in November, advancing to their second-highest pace since early 2008. Separately, the final December reading on consumer sentiment rose, the latest sign of postelection optimism.
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