Dull-all Street: Sensex out of tune with finance minister, loses 395 points

DELHI: Dalal Street investors gave a thumbs down to Nirmala Sitharaman’s first Budget as they thought that the proposals to increase public shareholding and tax on buybacks may be good for the long-term prospects of the market, but are negative for investors for now. The sensex lost 600 points from the day’s high and closed 395 points lower at 39,513 with 24 of the 30 sensex stocks closing lower.The day’s slide also led to a Rs 2.2-lakh-crore loss to investors’ wealth with BSE’s market capitalisation now down at Rs 150.8 lakh crore.
The Street’s disappointment comes from the fact that the finance minister’s proposal to raise public shareholding to 35% from 25% now, if implemented in one year, would need nearly Rs 4 lakh crore. On top of that, the government’s divestment target is Rs 1.05 lakh crore. “At a time when the stock market as well as the economy are showing signs of fatigue, I don’t think this is a good move to push for more supply of stocks,” said the head of a local brokerage.

However, the proposal is good for the long term since that would ensure a greater say of non-promoting shareholders in listed companies. “The proposal to raise public shareholding to 35% will ensure greater public participation in the stock market. But given the current market situation, it has to be handled strategically and efficiently. Else, it could turn detrimental to investor sentiment,” said Raamdeo Agrawal of Motilal Oswal Financial Services.
As a result of this proposal, among the bluechips, TCS closed 3.6%lower, while Wipro lost 4.2%. In both the stocks, promoter shareholding is above 65%.
According to Markets Mojo founder & CEO Mohit Batra, a stock market analytics firm, although the Budget is aimed at making India a $5-trillion economy in the next few years, for the market it has disappointed on many fronts.