Sensex plunges by 556 points; FPIs exit after poor results and tax demand
The total market capitalisation of all the BSE listed companies declined by Rs 1,59,620 crore to Rs 1,02,64,003 crore.
MUMBAI: The equity markets sank on Monday with the Sensex plunging over 1,000 points intra-day triggered by heavy selling by foreign portfolio investors (FPI) on lower than expected earning numbers from India Inc and tax notices served on the overseas investors, demanding the payment of minimum alternative tax (MAT) totalling Rs 40,000 crore.
The total market capitalisation of all the BSE listed companies declined by Rs 1,59,620 crore to Rs 1,02,64,003 crore. The continuing uncertainty over the fate of land acquisition amendment bill also weighed on the investor sentiment as it has raised concerns about the pace of economic reforms in India.
After opening the day on a negative note, the Sensex witnessed a free fall plunging 555.89 points or 1.95 per cent to end the trading session at 27,886.21. During the past four trading sessions, the Sensex has lost over 1,200 points. Meanwhile, the Nifty lost 157.90 points or 1.83 per cent to end the trading session at 8,448.10.
According to the provisional data released by the stock exchanges, FPIs sold shares worth Rs 1,506.86 crore. The heavy selling by portfolio investors also saw the rupee witnessing its worst intra-day fall since December 16, 2014. The partially convertible rupee fell sharply and touched an intra-day low of Rs 62.91 to the dollar before ending the day at Rs 62.56 to the dollar on Monday.
“Earlier, tax notices were served on few overseas investors. But the list has grown bigger following which foreign investors have turned net sellers in the Indian markets for the last few days,” said Ambareesh Baliga, a veteran market expert. According to him, disappointment in corporate earnings and uncertainty over the Land Acquisition amendment bill also impacted investor sentiments.
Reliance Industries Ltd (RIL) was the biggest loser among the Sensex constituents. The shares of RIL fell 4.46 per cent on the BSE. “Markets continued their correction, as the Q4 numbers have so far failed to bring any positive surprises. Now, the markets are concerned about a downgrade of FY16 earning estimates by 3-5 per cent,” said Vinod Nair, head of fundamental research, Geojit BNP Paribas Financial Services, adding, investors would watch the second half of the budget session very closely.
Right time to invest: Experts
While the equity markets are currently in a correction mode, experts tracking the market feel that it is the right time to invest in stocks with a medium to long-term perspective. The Sensex and the Nifty registered their fourth consecutive days of loss on Monday as overseas investors (FPIs) turned heavy sellers due to a host of domestic issues.
“Buy on dips should be the strategy as investors would be able to get quality stocks at cheap valuations,” said Deven Choksey, managing director, K.R. Choksey Securities. According to him, there are good opportunities in every sectors and investors should capitalise on that.
“There are quality stocks available in each sector like capital goods, commodities, banks, cements and NBFC’s among others. While making an investment decision, investors should look at the business fundamentals, track record of promoters and the financial position of the company,” he added.
On a similar note, Alex Mathews, head of research at Geojit BNP Paribas said that investors should consider building their portfolio in a phased manner by investing regularly on every dips. “The Nifty could fall by another 100 -150 points. I don’t see the index moving beyond those levels. So, investors can invest one fourth of their money at this point and wait for another correction to invest further. In this way, an investor can build their portfolio in a phased manner,” he added.
( Source : dc correspondent )
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