Indian markets fell sharply today, extending losses to the second day. At day’s low, the Sensex fell over 900 points and breached the 39,000 mark, extending its two-day loss to over 1,300 points. The Nifty slumped below 11,600. On Friday, both the Sensex and Nifty fell nearly 1% after some Budget proposals spooked market sentiments. Global cues were also weak today after strong US jobs data tempered expectations for a Fed rate cut. MSCI's broadest index of Asia-Pacific shares outside Japan lost more than 1%, with every market in the red.
Among the Sensex stocks, Bajaj Finance was the biggest loser, falling nearly 9%. NTPC, L&T, Hero MotoCorp, Maruti Suzuki and ONGC fell between 4% and 6%.
Here are 5 things to know about market fall today:
1) In Budget 2019, “tax on buyback of shares from companies and move to raise public float to 35% are fresh surprises and that would lead to some more adjustment of prices on the down side," says Ashish Nanda, EVP at Kotak Securities.
2) Rajiv Singh, CEO of stock broking at Karvy Broking, said many companies would need to increase their public shareholding, mostly by selling of promoters' stakes or additional equity issuance. "The detail to watch out for is the time allowed to meet this new rule," Singh added.
3) Though many analysts have welcomed the Budget proposals, they say there’s no big fiscal stimulus plan, quite contrary to what many investors had expected.
4) A higher income tax levy on high net individuals has also hurt sentiments further, say some analysts. Amar Ambani, president and research head at Yes Securities, said: “Union Budget FY20 was well detailed and in the right direction in terms of focus of this government. However, higher tax on high net-worth individuals reduces their investible surplus in stocks directly, through MFs and PMSes, especially in the midcap space." The BSE midcap index fell 2% today.
5) Analysts say that after the initial overhang of the Union Budget, focus would shift to the earnings season. IT heavyweights TCS and Infosys will announce their results on July 9 and July 12, respectively. On the macroeconomic front, IIP and CPI inflation will be unveiled on July 12. Besides, progress of monsoon and global developments will also be on participants’ radar.
Nifty has support at 1,500 levels and in case of any rebound, 11,900-12,000 zone would act as hurdle, says Religare’s Mishra, who advises stock- specific trading approach.