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Last Updated : Feb 03, 2020 03:20 PM IST | Source: Moneycontrol.com

Investors lose over Rs 7 lakh cr in Budget week,100 stocks fall 10-26%

Jimeet Modi of SAMCO advised investors to let the markets settle with the impatient volatility and invest once the noise dies down.

Sunil Shankar Matkar

Indian markets were dealt a double blow in the week gone by as the Union Budget failed to meet high expectations and China's wide-spreading coronavirus raised fears for the global economy.

The BSE Sensex plunged 4.5 percent, or 1,877.66 points, to 39,735.53 and the Nifty ended at 11,661.85, down 4.79 percent or 586.40. The BSE Midcap index lost 4.44 percent and the Smallcap index corrected 3.38 percent.

Selling was seen across sectors with auto, bank, capital goods, FMCG, metal and oil & gas falling 4-12 percent. The IT sectors, which ended 0.86 percent lower, performed relatively better after the Budged did away with the dividend distribution tax (DDT) for corporates.

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As the sentiment was hurt, about 420 out of the BSE 500 stocks closed the week in the red, of which top 100 saw a double-digit correction.

Godfrey Phillips, Bharat Electronics, Max Financial, PNB Housing Finance, Indiabulls Housing, Colgate, Piramal Enterprises, Vedanta, New India Assurance Company, DLF, Siemens, LIC Housing Finance, ICICI Prudential, Tata Steel, Canara Bank, MCX, ONGC, Welspun India, JK Tyre, RCF, Motherson Sumi, JSPL, Yes Bank, Tata Motors, Godrej Consumer Products, Ashok Leyland, Emami, Marico, SBI Life, Coal India, Hindalco, JSW Steel, Zee Entertainment, General Insurance Corporation, GAIL India and Varun Beverages corrected between 10 and 26 percent during the week.

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Note: We showed only 50 stocks as the list is big. The above stocks are not recommendations.

The introduction of a second personal income tax regime but with riders, no mention of LTCG and a marginal increase in the stimulus package for rural and infrastructure soured investors' mood.

The scrapping of DDT, an increase in insurance guarantee on deposit to Rs 5 lakh from Rs 1 lakh and raising of FPI limit in the bond market to 15 percent from 9 percent failed to revive the sentiment of investors who wanted strong measures to bring the economy back on track.

"All reforms announced by the FM Nirmala Sitharaman will bear fruits in the long term with a solid foundation but in the short term, there is nothing for the markets to cheer, given that there was limited leeway for the government to dole out further tax cuts," Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote, told Moneycontrol.

"Whatever the government has already committed, if executed well, should increase the growth in the years to come but the next few quarters maybe lacklustre. To sum it all, Union Budget 2020 is long-term growth-oriented but lacks short-term kickers," he said.

The coronavirus death toll in China climbed to 361, with more than 17,000 people infected with the virus. China is the world’s second-biggest economy and also the largest consumer of several products and services. The country’s isolation will have a ripple effect on the global economy, with a range of industries feeling its impact.

As the Budget gets priced in, the focus will shift to RBI’s policy and earnings. The market will remain range-bound till it gets a strong cue for a rebound, say experts.

"We will continue to see the overhang of the Union Budget this week as well. Besides, weak global cues would further add to the participants' worries," Ajit Mishra Vice President-Research at Religare Broking, said.

"Participants will be eyeing the RBI's monetary policy meet, however, the majority expects status quo, citing the rise in inflation. We have a long list of corporates who'll be announcing their numbers this week."

According to Jimeet Modi, Indian bourses are expected to rebound once the gears to understand the long-term implications of Union Budget start rolling. "But nonetheless, it seems that markets have entered into a short to medium-term corrective phase. Therefore, every rise will come with profit booking."

He advised investors to let the markets settle with the impatient volatility and invest once the noise dies down.

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First Published on Feb 3, 2020 03:18 pm
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