Explained: How Budget has put stock market on a downward journeyhttps://indianexpress.com/article/explained/union-budget-stock-market-sensex-bse-nifty-5820796/

Explained: How Budget has put stock market on a downward journey

While the fall in the benchmark indices was broadly in line with their Asian peers, which slid on strong US jobs data, the NDA government's move to tax share buybacks and hike minimum public shareholding in listed companies were among the domestic reasons that disappointed investors.

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With today’s fall, the benchmark Sensex has lost over 1,000 points post-Friday’s Budget.

The BSE Sensex tanked over 900 points while the broader Nifty 50 was down over 280 points in Monday’s noon trade. With today’s fall, the benchmark Sensex has lost over 1,000 points post-Friday’s Budget.

While the fall in the benchmark indices was broadly in line with their Asian peers, which slid on strong US jobs data, the NDA government’s move to tax share buybacks and hike minimum public shareholding in listed companies were among the domestic reasons that disappointed investors.

Budget Proposals

The proposal in Friday’s budget to hike minimum public shareholding of listed companies to 35 per cent from 25 per cent has been perceived as a dampener. It, however, depends on how market regulator Sebi goes about implementing the process and the manner in which it seeks to implement the deadline, Edelweiss Securities said in a report. The Budget proposal to levy a 20 per cent tax on buybacks is also seen as a negative, alongside the increase in income-tax surcharge on high net worth individuals.

Global factors

The selloff was partly on account of the US job growth data, which showed a strong rebound in June. This is a dampener to the general expectations of aggressive rate cuts by the US Fed, which was being anticipated earlier. This had prompted a selloff across Asia, with the Shanghai Composite index down over 2 per cent , Hong Kong’s Hang Seng and South Korea’s KOSPI down over 1.5 per cent each and Japan’s Nikkei down over 1 per cent during trade on Monday.