July 11: A routine written reply in Parliament by Nirmala Sitharaman, in her capacity as the junior minister in the finance ministry, on General Anti-Avoidance Rules (GAAR) today spooked the stock market, with the Sensex crashing over 348 points.
Sitharaman today said the controversial GAAR provisions would be implemented from April next year.
The Sensex frittered away its early gains to log its worst weekly drop since December 2011 as the news spread among the broking community.
Many in the markets had expected the NDA government to defer the implementation of the regulation to 2017.
Later in the day, the North Block went into damage control with R.K. Tiwari, chairman of the Central Board of Direct Taxes, telling a news channel that a view was yet to be taken on GAAR and the government would take a decision at an appropriate time.
The lack of buying interest owing to the disappointment over the budget proposals and concerns over the developments in Portugal also contributed to the fall.
Experts point out that the lack of specific details in the budget proposals and the absence of steps to reduce subsidy have disappointed investors.
The BSE benchmark index opened on a higher note at 25488.86, boosted by the Infosys numbers.
However, the party could not last long as profit-taking crept in after nearly 90 minutes of trading. The Sensex, thereafter, hit an intra-day low of 24978.33, before ending at 25024.35 — a fall of 348.40 points, or 1.37 per cent, over Thursday.
The Sensex has ended in the negative territory in four trading sessions with more than 1000 points being shaved off. For this week alone, the index has crashed over 937 points.
Brokers said while high net worth individuals had been booking profits, foreign portfolio investors (FPIs) had largely been net buyers.
On the National Stock Exchange, the 50-issue Nifty moved in a wide range of 7625.85 and 7447.20 before settling at 7459.60, a fall of 108.15 points, or 1.43 per cent.
Though indices in Europe were trading higher, market circles said investors had turned cautious on news that the parent of Portugal’s biggest listed bank, Banco Espirito Santo, had missed debt payments.
Realty, capital goods, power, refinery and banking counters led the losers at Dalal Street. However, IT counters saw buying interest following a strong show by Infosys.