Mumbai: In what marks one of the sharpest falls in the recent times, especially after demonetisation and implementation of GST, equity markets witnessed a bloodbath on D-Street. The Sensex shed around 900 points intraday, while the Nifty breached 10,750-mark as well.
The fall in Friday’s market capitalisation on the Sensex to Rs 1,48,54,452 crore from Rs 1,53,13,033.38 ensured that investors wiped off Rs 4.5 lakh crore.
Experts attribute this huge fall on the back of several factors, including announcements made in the Union Budget. The levy of long term capital gains tax (LTCG), along with slippage on the fiscal deficit side and rising bond yields dragged indices lower. They also attribute a dampener on the back of Rajasthan bypoll results.
“The major part of today’s correction can be attributed to the budget announcement of imposition of LTCG on equity, introduction of a tax on distributed income by equity oriented mutual funds & fiscal slippage. The markets were overheated & a healthy correction will lead to some bit of PE compression. However, earnings for this quarter so far have shown good traction. One should ideally have a shopping list ready & a strategy to deploy in tranches,” Devang Mehta, Head – Equity Advisory, Centrum Wealth Management said in a statement.
Among precious metals, gold prices were up by 0.56 percent to Rs 30,677 per 10 grams in futures trade as speculators built up fresh positions, tracking a firm trend overseas.
At the Multi Commodity Exchange, gold for delivery in February traded higher by Rs 172, or 0.56 per cent, to Rs 30,677 per 10 grams, in a business turnover of 142 lots.
Meanwhile, in the global markets, Asian shares came under pressure after Wall Street closed mixed and yields on U.S. government debt rose in the last session. European equities moved lower on Friday morning as investors digested further earnings reports.
In terms of stock-specific action in India, Larsen and Toubro ended 3 percent lower. L&T Construction, the construction arm of Larsen & Toubro, won orders worth Rs 2,275 crore across various business segments.
Shares of Vakrangee continued to plummet to new lows, with the stock trading at 10 percent lower circuit for the third consecutive day.
PC Jeweller crashed nearly 60 percent in morning following further correction in Vakrangee wherein the company holds some stake, but post the management clarification saying there is no business interest with the IT firm, the stock recovered half of losses to trade lower by 25 percent.
Technology stocks bucked the trend when the frontline indices and broader markets hitting hard. The Nifty IT index gained around 0.15 percent, while other sectoral indices were down around 1-5 percent.
Info Edge’s Q3 net profit fell 32.1 percent sequentially to Rs 53.4 crore on weak operational performance and slow revenue growth. The stock ended 1.2 percent higher on reports of a stake sale in Zomato.
Hindalco Industries ended 3 percent lower after it reported profit growth of 17.2 percent year-on-year at Rs 375 crore for December quarter, driven by copper business.
Bajaj Auto reported lower than expected net profit for the December quarter at Rs 952.4 crore against Rs 924.6 crore year on year. The stock was an index loser, ending around 5 percent lower.
“Sensex & Nifty saw heavy selling post budget day. Investors were disappointed with LTCG coming in over & above STT. Salaried class was also disappointed. However, budget is aimed at spurring demand from Rural India & masses going forward to take care of India growth story. Execution & implementation will be the key ahead. Inflation is expected to rise & margins of the companies may also see some contraction,” Anita Gandhi, Whole Time Director at Arihant Capital Markets said in a statement.