Budget 2020: Sensex tanks over 900 points, slips below 40,000-mark, Nifty down 300 points; Rs 3.46 lakh cr investor wealth wiped off

ITC was the top laggard in the Sensex pack, tanking 6 percent, followed by HDFC, L&T, SBI, ICICI Bank and ONGC.

FP Staff February 01, 2020 15:35:31 IST
Budget 2020: Sensex tanks over 900 points, slips below 40,000-mark, Nifty down 300 points; Rs 3.46 lakh cr investor wealth wiped off
  • ITC was the top laggard in the Sensex pack, tanking 6 percent, followed by HDFC, L&T, SBI, ICICI Bank and ONGC

  • TCS, HUL, Tech Mahindra and Infosys bucked the market trend to trade with gains

  • In the morning, the market benchmark Sensex slumped over 200 points ahead of the release of the Union Budget

The Sensex logged its biggest single-day plunge in more than a decade on Saturday after the Union Budget failed to live up to market expectations of growth-boosting measures and fiscal discipline.

The benchmarks, which started on a shaky note, tanked soon after Finance Minister Nirmala Sitharaman pegged the fiscal deficit at 3.8 percent for the current fiscal, compared to the earlier target of 3.3 percent of GDP.

Presenting the Union Budget for 2020-21 in Parliament, Sitharaman also proposed lower income tax slabs for those foregoing various exemptions, and removed dividend distribution tax on companies, effectively shifting the tax burden to the recipients.

The BSE Sensex plummeted over 1,000 points to sink below the 40,000-level in late afternoon trade on Saturday, tracking a massive selloff in capital goods and financial stocks after Finance Minister Nirmala Sitharaman presented the Union Budget for 2020-21.

Nosediving nearly 1,275 points from the day's high, the 30-share BSE Sensex ended 987.96 points or 2.43 percent lower at 39,735.53.

This was the benchmark's biggest drop since 24 October, 2008, when it had plummeted 1,070.63 points, and the fourth biggest fall overall.

On similar lines, the 50-share NSE Nifty plunged 300.25 points or 2.51 percent to close at 11,661.85.

Investor wealth, measured in terms of value of all listed shares on BSE, plunged by Rs 3,46,256.76 crore to reach Rs 1,53,04,724.97 crore.

Budget 2020 Sensex tanks over 900 points slips below 40000mark Nifty down 300 points Rs 346 lakh cr investor wealth wiped off

Representational image. Reuters.

Since the last Budget presentation in July 2019, the Sensex has gained 222.14 points or 0.56 percent, while the Nifty slumped 149.30 points or 1.26 percent.

Analysts said income tax slab rejigs stoked fears of declining inflows in tax-saving investment avenues, while the proposed transfer of dividend distribution tax to investors added to the negative sentiment.

"The lack of major growth boosting measures in itself is negative for the equity market. The new income tax regime would also be negative for tax exempt equity savings schemes. Recasting of dividend taxation norms also seem to be on the balance negative for most domestic equity investors. Overall, the budget seem to be negative for the equity market," said Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers.

ITC was the top laggard in the Sensex pack, tanking 6.97 percent, after the Budget hiked the excise duty on cigarettes.

L&T, HDFC, SBI, ONGC, ICICI Bank and IndusInd Bank also lost up to 5.98 percent.

On the other hand, TCS rallied 4.13 percent, followed by HUL, Nestle India, Tech Mahindra and Infosys.

In the morning, the market benchmark Sensex slumped over 200 points ahead of the release of the Union Budget to be presented by  Sitharaman later in the day.

In her second Budget presentation, the finance minister said certain government securities will be open for foreign investors, adding that the Centre plans to increase investment limit for FPIs in corporate bonds from 9 percent to 15 percent.

Abhinav Gupta, President, Capital Market, Share India Securities, said, "We are extremely disappointed with budget. No significant announcement for industry or consumers. Name sake changes in income tax slabs only to create political mileage that may not lead to any significant changes in growth prospects in near term.

"The FM could have made several key initiatives to spur investment and domestic consumption to address the pain points of the economy. While this budget could have focused on capital creation for nationals as well."

Sectorally, BSE realty index plunged 7.82 percent, followed by capital goods, industrials, finance, bankex and metal.

IT and teck ended with gains of up to 1.41 percent.

"DDT removal is good as it increases dividends received in the hands of the taxpayer. However, such receipts now are taxable in their hands. Those above 20 percent tax slab will now face more tax on their dividend income," said Archit Gupta, Founder, and CEO, ClearTax.

In the previous session, Sensex settled 190.33 points, or 0.47 percent, lower at 40,723.49, after the Economic Survey suggested relaxing fiscal deficit target to boost growth from a decade low.

Likewise, the broader NSE Nifty shed 73.70 points, or 0.61 percent, to finish at 11,962.10.

Benchmarks on Wall Street ended with sharp losses on Friday.

According to analysts, investors are cautious ahead of the Union Budget as all eyes will be on how centre is going to bring growth as any increase in spending would result in widening of fiscal deficit.

Negative cues from global markets amid concerns over China's coronavirus outbreak continued to weigh on investor sentiment here, traders said.

With inputs PTI

Follow full coverage of Union Budget 2020-21 here

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