MUMBAI: The stock market’s debacle on 28 February when Finance Minister P. Chidambaram presented the budget stripped off as much as Rs1,80,000 crore from investors’ kitty, as budget blues added to the global meltdown woes.
The BSE Sensex, which registered a whopping intra-day loss of 678 points even before Chidambaram rose to announce the budget, closed below the 13,000 milestone with a plunge of 540 points from the previous close.
The Bombay Stock Exchange’s market capitalisation, which had tanked to as low as Rs34,34,000 crore in early morning trade, stood at an estimated Rs34,70,000 crore at the end of the day’s trading with net loss of about Rs 1,45,000 crore in investors’ wealth.
The combined market cap of 30 companies in Sensex alone declined by about Rs70,000 crore, with companies like Satyam Computer, Gujarat Ambuja, Wipro, HDFC, ACC, TCS, Tata Steel, Maruti, Grasim and Infosys leading the pack of losers.
Information technology and cement stocks were among the worst hit with proposals like higher excise duty for cement and increased tax burden for the technology firms, while increase in dividend distribution tax for all companies added to the broad-based selling pressure on the bourses.
The finance minister proposed on 28 February to raise the DDT to 15% from 12.5% from 1 April 2007.
The loss of 540 points on 28 February is the biggest one-day fall for the Sensex on the Budget day in the past ten years, although the market has treaded downwards on five occasions out of the past ten Budget days.
The second biggest fall of 300 points was recorded at the time of budget announcement in 2000.