Millennium Post

FII sell-off wipes out `1.78 tn from investor wealth in April

Tax issues, disappointing fourth quarter earnings and forecast of weak monsoon were spoilsports for the stock market last month, leading to heavy sell offs and making investors poorer by Rs 1.78 lakh crore.

The BSE 30-share Sensex plummeted by 946.18 points or 3.38 per cent to 27,011.31 last month, registering its second straight monthly fall. Tracking weakness in the stock market, total investor wealth at the BSE slumped to Rs 99.7 lakh crore, from Rs 101.49 lakh crore as on March 31. Experts said below-expectation earnings posted by Indian companies, the issue of imposing minimum alternate tax (MAT) on Foreign Portfolio Investors and forecast of a weak monsoon for the second consecutive year haunted the market, resulted in overall correction in equities.

"Just as the domestic investors were coming to terms with the MAT issue, there have been concerns with monsoon in India as projected by the Indian Meteorological Department," said Paras Bothra, VP, Equity Research, Ashika Stock Broking Limited. India is likely to witness a "below normal" monsoon this season, for a second consecutive year, the Indian Meteorological Department (IMD) has predicted as it partly blamed the El Nino phenomenon for the low forecast.

The weather office predicted that the south-west monsoon will be below normal in 2015 and indicated that the disruptive El Nino phenomenon could make things worse for India's largely rain-fed farms, which might have a negative bearing on the inflation numbers, Bothra added. Analysts said that after a good correction, the market is now ripe for a decent rally. "Market is likely to move post closure of Parliament session. In the meanwhile if any bills like GST or land acquisition bill get passed then it will be added fodder for the bulls," said a broker.

Meanwhile, seeking to calm investors, Finance Minister Arun Jaitley yesterday offered tax relief to FIIs by exempting some of their income from MAT and announced that an "extremely simplified" income tax return form will soon replace the controversial 14-page ITR that sought details of all bank accounts and foreign trips. With funds fleeing India amid escalating row with government over 20 per cent MAT on capital gains made by them in the past three years, Jaitley offered relief by exempting income foreign firms earned from securities transactions and interest, royalties and fees for technical service from MAT. 

Fund raising via non-convertible debentures slips 77% in 2014-15
Fund raising through retail issuance of non-convertible debentures (NCDs) plunged by 77 per cent to Rs 9,743 crore in 2014-15. According to data available with the Securities and Exchange Board of India (Sebi), the funds mobilisation came in was Rs 9,743 crore for 2014-15, way below the Rs 42,383 crore mopped up in the preceding fiscal. In terms of numbers, fresh capital was raised through 25 issues in the past financial year compared with 35 in 2013-14. Overall the companies had an initial target of Rs 4,225 crore.Experts said fund raising via this tool has lost some of its sheen as companies have gone for Qualified institutional placement (QIPs) and rights issues. 
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