Sensex tanks by 723 points on GST, ‘stalled reforms’ worries
Stock market witnessed a bloodbath on Wednesday with Sensex tanking 723 points -- its second biggest single day fall since Narendra Modi government took over -- on huge sell-off by FIIs on concerns over Goods and Service Tax and other reforms.
Across-the-board sell-off was triggered by concerns that reform process may get delayed as the key GST bill faces strong political opposition even as it got through Lok Sabha. Slowdown in the services and manufacturing sectors as also persistent taxation worries added to the pressure.
Some traders said that conviction of hugely popular bollywood actor Salman Khan in a 13-year-old hit and run case could also have been at play, as a large number of HNI investors and traders typically rotate their funds between stock market, real estate and film industry. “Traders remained concerned due to prevailing conflict between the opposition and government over key bills in the parliament,” said Jayant Manglik, President of Retail distribution at Religare Securities. The 30-share Sensex after opening a shade higher at 27,473.36 and advanced to a high of 27,501.15. However, it succumbed to selling pressure and dipped below the 27,000-mark with blue-chip stocks ICICI Bank, ONGC, Cipla and ITC, among other plummeting. It touched a low of 26,677.64 before settling 722.77 points or 2.63 per cent lower at 26,717.37, the lowest in nearly 5 months. This is the biggest single day fall in last four months after 855 points plunge on January 6. Besides, this is the second-biggest since Modi government took over on May 26,2014.
The 50-share NSE Nifty crashed by 227.80 points or 2.74 per cent to close below 8,100-mark at 8,097. On expectations of speedy reforms promised, the Sensex was on an upward spiral for over nine months and soared to an all-time high of over 30,000 points early in March this year. However, it has lost over 3,300 points from its peak, wiping out more than half of the gains made since the change in government.
“The Sensex has lost nearly 2,400 points (over 8 per cent) in the last three weeks primarily on account of the concerns pertaining to the FIIs taxation (MAT) issue, the nervousness surrounding the March quarter earnings season, which has failed to surprise on the upside as yet and the possibility of a second consecutive year of weak monsoon,” said Hitesh Agrawal, Head of Research at Reliance Securities.