Selling pressure intensified in morning trade, which dragged key benchmarks to two-week low levels. At 10:29 IST, the barometer index, the S&P BSE Sensex, was down 511.89 points or 1.43% at 35,394.77. The Nifty 50 index was down 148.85 points or 1.35% at 10,868.05. The Sensex was trading below its psychological 36,000 mark after opening below that level. The Nifty was trading below its psychological 11,000 mark after opening below that level. Enthusiasm among investors dipped after the government reintroduced long-term capital gains (LTCG) tax. Negative leads from Asian markets also spoiled investors sentiment.
The Sensex and the Nifty, both, hit two-week low in morning trade. The Sensex fell 168.53 points, or 0.47% at the day's high of 35,738.13 in early trade. The index fell 521.72 points, or 1.45% at the day's low of 35,384.94 in morning trade, its lowest intraday level since 19 January 2018. The Nifty fell 61.95 points, or 0.56% at the day's high of 10,954.95 in early trade. The index fell 166.60 points, or 1.51% at the day's low of 10,850.30 in morning trade, its lowest intraday level since 19 January 2018.
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 and projected a fiscal deficit of 3.3% of GDP for the year 2018-19. Jaitley said that 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%.
Among secondary barometers, the BSE Mid-Cap index slumped 3.71%. The BSE Small-Cap index tumbled 4.53%. Both these indices sharply underperformed the Sensex.
The broad market depicted weakness. There were more than nine losers against every gainer on BSE. 2,169 shares fell and 233 shares rose. A total of 72 shares were unchanged.
Metal shares slumped. Bhushan Steel (down 7.82%), Steel Authority of India (down 7.39%), Hindustan Copper (down 5.67%), Jindal Steel & Power (down 5.63%), NMDC (down 4.94%), Hindustan Zinc (down 4.22%), Tata Steel (down 2.87%), Hindalco Industries (down 2.8%), National Aluminium Company (down 2.48%), JSW Steel (down 2.25%) and Vedanta (down 1.73%), edged lower.
Overseas, Asian shares were trading lower after the Wall Street closed mixed. 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.
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