Monday, 30th October 2017

E- paper

Fading stimulus hope fells stocks

The Sensex tanked nearly 600 points which nailed down the hopes of any tax giveaways by the government to industry

  • Published 23.08.19, 2:13 AM
  • Updated 23.08.19, 2:14 AM
  • a min read
  •  
Yes Bank was the biggest laggard in the Sensex pack, followed by Vedanta, Bajaj Finance and Tata Motors. which declined up to 7.76 per cent The Telegraph file picture

The Sensex tanked nearly 600 points on Thursday following chief economic adviser Krishnamurthy Subramanian’s disparaging views on economic stimulus, which nailed down the hopes of any tax giveaways by the government to industry, with the ripple effects reaching the rupee that hit an eight-month low against the dollar.

Investor wealth eroded Rs 2,17,818 crore as the 30-share BSE Sensex bled 587.44 points, or 1.59 per cent, to close at 36472.93. The broader NSE Nifty slumped 177.35 points, or 1.62 per cent, to 10741.35.

Stocks have been under pressure after the Union budget raised the surcharge on certain foreign portfolio investors (FPIs). Since then, foreign investors have been on a selling spree and have dumped shares worth $3 billion in July and August.

On Wednesday, the Securities and Exchange Board of India simplified the framework applicable to these investors.

Though the measures are being seen as positive, they did not have much impact on the markets, which were still waiting for steps from the Centre that include the withdrawal of the higher surcharge imposed on foreign investors and some changes in the long-term capital gains tax.

“The Indian market is down when the region is largely flat and US futures are flat. There are multiple reasons. While the measures on FPI regulations are good, the market still awaits clarification on the tax proposals for FPIs made in the budget,” Vivek Ranjan Misra, head of fundamental research, Karvy Stock Broking, said.

Yes Bank was the biggest laggard in the Sensex pack, followed by Vedanta, Bajaj Finance and Tata Motors. which declined up to 7.76 per cent.

“Moreover, the market is getting impatient about the prospects of a stimulus package from the government and the comments made by some government officials have dimmed hopes. We continue to expect some weakness in the near term, but expect the economy to stabilise in the second quarter of 2019-20 and recover in the second half,” Misra added.

ONGC, SBI, Hero MotoCorp, ICICI Bank, Tata Steel, the HDFC duo and RIL were some of the others, which closed in the red.

Globally, markets were jittery ahead of the comments from US Federal Reserve chairman Jerome Powell at Jackson Hole in Wyoming. In Asia, the Shanghai Composite Index and Nikkei ended on a positive note, while Hang Seng and Kospi settled in the red.