The market showed no sign of arresting its slide as key benchmark indices hit fresh intraday low in mid-afternoon trade. At 14:20 IST, the barometer index, the S&P BSE Sensex, was down 656.59 points or 1.83% at 35,250.07. The Nifty 50 index was down 200.30 points or 1.82% at 10,816.60. The Nifty was trading 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. Cement shares fell across the board. Telecom shares witnessed selling pressure.
The Sensex and the Nifty, both, hit two-week low in mid-afternoon trade. The Sensex fell 661.80 points, or 1.84% at the day's low of 35,244.86 in mid-afternoon trade, its lowest intraday level since 19 January 2018. The Nifty fell 210.70 points, or 1.91% at the day's low of 10,806.20 in mid-afternoon trade, its lowest intraday level since 19 January 2018.
Overseas, European shares were trading lower as investors digested earnings reports.
Asian shares were mixed. 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.
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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.
Back home, the broader market depicted weakness. The BSE Mid-Cap index was down 3.12% while the BSE Small-Cap index was down 3.92%. Both these indices underperformed the main barometer, the Sensex.
The market breadth was quite weak. On BSE, 2,466 shares fell and 300 shares rose. A total of 111 shares were unchanged.
Hindalco Industries dropped 2.24% 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.
Cement shares declined. UltraTech Cement (down 3.72%), ACC (down 2.43% and Ambuja Cements (down 1.72%), edged lower.
Grasim Industries was down 4.06%. Grasim has exposure to cement sector through its holding in UltraTech Cement.
Telecom shares fell across the board. Reliance Communications (down 8.73%), MTNL (down 7.84%), Tata Teleservices (Maharashtra) (down 3.45%), Idea Cellular (down 2.14%) and Bharti Airtel (down 1.45%), edged lower.
Telecom tower infrastructure provider Bharti Infratel was down 0.26%.
CEAT fell 9.67% after consolidated net profit fell 1.85% to Rs 82.10 crore on 12.81% growth in total income to Rs 1588.42 crore in Q3 December 2017 over Q3 December 2016. The result was announced after market hours yesterday, 1 February 2018.
Anant Goenka, Managing Director, CEAT said the company witnessed steady growth in topline driven by robust volumes across passenger, two-wheelers and commercial vehicle tyres segments. Margins have also improved with favorable raw material prices and continued cost efficiencies.
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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