Skip to main content

Why did sensex / nifty (indian stock market) fall shaply? - 10 reasons.

Here are 10 reasons why markets fell sharply


  1. Increased spending: Mr Chidambaram proposed to raise government spending to Rs. 16.65 trillion against expectations of a closer check on spending to curtail the fiscal deficit to 4.8 per cent of GDP in FY14. "The biggest surprise in the Budget was the sizeable increase in public spending, including on welfare programmes, which will be financed largely through revenue raising measures. This will have surprised and disappointed many..." global investment bank Credit Suisse said.
  2. Quality of spending: Prabhat Awasthi, managing director & head of equity research at Nomura India said the growth in expenditure is on account of social schemes, not on capital expenditure, which is an indicator of an expansionary Budget.
  3. Higher taxes: The government sought to increase taxes on certain individuals and companies. Those tax proposals hit stocks. The government also disappointed some investors by not announcing a cut in debt withholding tax."The absence of a cut in withholding tax also disappointed. Debt flows would have increased had the government cut the WHT, which would have been positive for rupee as well," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
  4. Foreign investors turned net sellers: A perception that the government lacked major initiatives to woo foreign investors added to the disappointment given net inflows from abroad play a key role in share performance. According to provisional data FIIs were net sellers in the markets today weighing on sentiments.
  5. Regulatory worries: Double tax avoidance agreements also hit shares after the finance ministry said tax residency certificates were no longer sufficient to claim benefits.
  6. Banking stocks led the selloff: State-run lenders declined after the government announced a higher-than-expected gross market borrowing target (at 6.29 trillion rupees in 2013-14 above estimates of less than 6 trillion rupees) as part of its 2013-14 budget, raising concerns about liquidity in the banking system.
  7. Private sector lenders also fell after the finance minister proposed to extend a scheme that provides farmers with low-cost loans to private banks.
  8. Investors expressed broad disappointment over the budget, with incentives such as reducing the securities transaction tax on equity futures and imposing a transaction tax on futures contracts of non-agricultural commodities not seen as big enough to sway investors.\
  9. A surprise hike in tax on sports utility vehicles hit Mahindra & Mahindra. Shares in Adani Ports and Special Economic Zone fell after the finance minister proposed setting up two new ports in Andhra Pradesh and West Bengal, raising worries about more competition in the sector.
  10. Derivatives expiry: Some analysts like Manishi Raychaudhri of BNP Paribas Securities said the selling could have been on account of the contracts expiry today.

    http://profit.ndtv.com/news/market/article-budget-2013-ten-reasons-why-sensex-dropped-291-points-318780?ch=as

Comments

Popular posts from this blog

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may ...

How to use home loans most effectively for tax benefits

1) Deduction on interest: If you are paying EMIs for a home loan you took to buy a house, the interest component in the EMI can be claimed as deduction. You must be both an owner and a co-borrower (in the loan) to claim tax benefits. This deduction can be claimed starting the year in which the construction of the house is completed. Suppose the construction of your house was completed on August 30, 2014, you can claim deduction for interest for the entire 12 months in financial year 2014-15. So every year a maximum of Rs. 2 lakh can be claimed for a house that you use for your own residence. If your house is rented, the entire interest for the year can be claimed as deduction. The interest payments for the year shall result in a loss under the head 'income from house property'. This loss can be adjusted against in the same year against other heads of income in your income tax return including salary. Therefore, it reduces your total taxable income and the tax you pay thereon. A...

Intellectual battle against ISIS as important as Military: Sheikh Makhtoum of Dubai

The global financial crisis taught the world how profoundly interdependent our economies have become. In today's crisis of extremism, we must recognize that we are just as interdependent for our security, as is clear in the current struggle to defeat ISIS. Mohammed bin Rashid Al Maktoum, VP and prime minister of the UAE, ruler of Dubai If we are to prevent ISIS from teaching us this lesson the hard way, we must acknowledge that we cannot extinguish the fires of fanaticism by force alone. The world must unite behind a holistic drive to discredit the ideology that gives extremists their power, and to restore hope and dignity to those whom they would recruit. ISIS certainly can – and will – be defeated militarily by the international coalition that is now assembling and which the UAE is actively supporting. But military containment is only a partial solution. Lasting peace requires three other ingredients: winning the battle of ideas; upgrading weak governance; and ...