Budget impact on stock markets: Sensex cracks over 450 points, Nifty declines 122 points in volatile session; power, metal stocks sink

Mumbai: The BSE Sensex cracked over 450 points Friday, dragged by power, oil and gas, metal and energy counters, after the Budget proposal of raising public shareholding threshold sparked fears of sufficient liquidity to absorb the additional float of shares. Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman said it was the right time to consider increasing minimum public shareholding from 25 percent to 35 percent. In a highly volatile session, the 30-share index was trading 458.94 points, or 1.15 percent, lower at 39,449.12 at 1330 hours. Similarly, the 50-share NSE Nifty declined 121.75 or 1.02 percent, to 11,825. The Sensex had reclaimed the 40,000-mark and the NSE Nifty inched closer to the 12,000-level in morning trade ahead of the Budget presentation. Barring telecom, all sectoral indices on BSE were trading in the red. Top losers in the Sensex pack included Yes Bank, NTPC, ONGC, TCS, Vedanta, Sun Pharma and Tata Steel, falling up to 5.40 percent. On the other hand, IndusInd Bank, Bharti Airtel, HUL, Kotak Bank, SBI and Bajaj Finance rose up to 1.76 percent. [caption id=“attachment_4472957” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking, said, “While we need to await Sebi regulations regarding how much time will be given to these companies to meet with this minimum public shareholding norms, the overhang of this requirement of off-loading of promoter shareholding can have significant impact on the markets and the specific stocks.” However, many PSUs have not yet been able to meet the 25 percent public shareholding norm. “The regulator needs to provide sufficient time to meet this requirement so as not to over-flood the markets with stake sales by promoters,” he added. The Budget also proposed rationalisation and streamlining of KYC norms for foreign portfolio investors to make them investor-friendly. The finance minister said the government will provide one-time partial credit guarantee to public sector banks to buy rated pooled assets of financially sound NBFCs. Sitharaman also said the government proposes to initiate steps for an electronic fundraising programme for a listing of social enterprises and voluntary organisations. She also announced raising the disinvestment target to Rs 1,05,000 crore in FY 2019-20 as against Rs 90,000 crore set in the interim Budget. Interoperability of RBI depositories and SEBI depositories is necessary for seamless transfer of treasury bills, she said, adding the government will take necessary measures for the same. The rupee, meanwhile, witnessed a sharp recovery to trade at 68.50 against the US dollar.

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