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Sensex Slumps 600 Points On Higher Tax Incidence For Foreign Investors

Jul 08, 2019

The S&P BSE Sensex and NSE Nifty 50 indexes plunged for a second straight session after Finance Minister Nirmala Sitharaman, 

while presenting Budget for financial year 2019-20 on Friday, proposed to increase the minimum public shareholding in listed companies along with higher tax incidence for foreign portfolio investors and high net-worth individuals.

"I have asked SEBI to consider raising the current threshold of 25 per cent to 35 per cent," Ms Sitharaman said in her first Budget speech. The Sensex fell more than 650 points and the NSE Nifty 50 index dropped below its crucial psychological level of 11,650 on Monday.

Auto and banking shares were among the worst performers in today's session amid broad-based selling pressure.

At 11:05 am, the Sensex traded 1.49 per cent - or 589 points - lower at 38,925 while the NSE Nifty index was down 1.52 per cent or 179 points at 11,632.

 "Higher tax incidence proposed in the Budget for foreign portfolio investors and high net worth individuals is spooking the markets," AK Prabhakar, head of research at IDBI Capital told NDTV over phone. "Proposal to increase minimum public shareholding for all listed companies in Budget is also impacting the markets negatively," Mr Prabhakar added.

 Selling pressure was broad-based as all the sector gauges compiled by National Stock Exchange struggled with losses, led by a 5.5 per cent drop in the Nifty PSU Bank index. The Realty, Auto, Bank, Financial Services, Media and Private Sector Bank gauges also fell between 2 and 3 per cent each.

 Mid- and small-cap shares also faced selling pressure with the Nifty Midcap 100 Index and Nifty Smallcap 100 indexes falling 2.55 per cent and 2.27 per cent respectively.

 In the Nifty 50 basket, 45 stocks declined, led by Hero MotoCorp which fell 4.8 per cent.

 ONGC, Bajaj Finance, Indian Oil, State Bank of India, Larsen & Toubro, Grasim Industries, NTPC, Tata Motors, Bharat Petroleum, Maruti Suzuki, ICICI Bank and Eicher Motors were among the losers, down between 2.77 per cent and 4.64 per cent.

 On the flipside, Yes Bank, HCL Technologies, Bharti Infratel, TCS and Tech Mahindra were among prominent gainers.

 Market breadth was extremely negative as 1,431 shares declined on the BSE, against 252 that advanced.

 The Sensex and Nifty had shed 0.99 per cent and 1.14 per cent respectively last Friday, after the presentation of Budget for 2019-20 in Parliament by the government.

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