In an anxious move, 5 lakh crore of equity investor wealth was wiped off in a matter of 2 days. The market responds to a budget that isn’t ‘market-friendly’.
The market capitalization of all the BSE-listed companies plunged to Rs 148.43 lakh crore on Monday (around 11.40 am) from Rs 153.58 lakh crore at the start of Friday.
- Budget proposal to raise income-tax surcharge on the ultra-rich
- This proposal affects about 2000 foreign funds structured as trusts or AOPs. New liability slabs were created causing this class to pay more.
- Investors believed the Budget proposals did not contain any concrete proposals to ease liquidity crunch facing the financial markets.
- Shares fell after Sitharaman proposed increasing the minimum public shareholding in listed companies to 35% from 25.
- On the currency front, the rupee depreciated 25 paise to 68.66 against the US dollar.
In the broader market
Selling was severe in small-caps. The BSE Smallcap index traded over 2% down in late morning trade, while BSE Midcap index fell over 1.47%.
Hero MotoCorp, PNB, Indian Oil Corporation, and Dilip Buildcon witnessed their biggest fall of the year and Bajaj Finance along with Bank of India saw their second biggest fall in a year.
Shares of IT companies fell with Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies down nearly 5% after the Budget proposed to extend the buyback tax at 20% to listed companies as well.