Sensex and Nifty fell on Monday morning over a percentage point each
On Friday, Finance Minister Nirmala Sitharaman presented a Budget that promised large infrastructure investment, offered a rescue package for the distressed NBFCs and allocated an unexpectedly higher - Rs 70,000 crore - towards recapitalisation of Public Sector Banks, but it disappointed the Dalal Street.
Sensex and Nifty fell on Monday morning over a percentage point each. While Sitharaman did not tinker with the Long-Term Capital Gains (LTCG) tax on equity as per the market expectations, she did tweak the STT or Securities Transaction Tax some bit, by announcing that it will now be levied only on the difference between strike price and settlement price.
Experts say while higher tax on HNIs or high net worth individuals and plan for higher public floating for listed companies did not go down well with investors, more than presence of negative news it is the absence of big positives that seems to have made the market turn southward, as valuations are high in certain pockets and there are no supportive factors to sustain those prices.
The Finance Minister's announcement asking stock market regulator Sebi to increase public shareholding from 25 per cent to 35 per cent was seen as the biggest wealth-shifting announcement, as this would bring in a lot of additional paper in the market, sucking out liquidity. Some analysts read it as a negative for the market and insisted that some of the businesses, especially in the case of mid-cap and small-cap, promoters would end up loosing more.
The BSE Sensex lost 400 points at 39,112 in early trade on Monday in the first post-Budget week. The Nifty opened down as well trading 120 points down at 11,691 points.
During the Budget, the BSE Sensex had fallen 394.67 points to 39,513.39 and the Nifty50 declined 135.60 points to 11,811.20 after finance minister Nirmala Sitharaman had proposed increasing the minimum public shareholding in listed companies to 35 per cent from 25 per cent.