Stock Market Mayhem Continues Post Budget

Post budget announcement since July 5, the market narrowness still continues to send shock waves across India Inc. For the Indian markets, it was a bloodbath for the bourses, which saw the biggest single day fall in four years, where Nifty fell over 250 Points intraday and Sensex fell more than 800 Points, the worst single day fall in four years. The Sensex closed at 38,720.57 by 792.82 points down, whereas the broader Nifty 50 Index crashed 252.55 points and closed at 11,558.60. 

Various factors have contributed towards the fall in Sensex and Nifty. Commenting on the same, Amar Ambani, President & Research Head, YES Securities said, “The market fall today was on account of concerns over future fund flow into the secondary market and scam revelation at PNB. Hike in surcharge in the Budget will have an adverse impact on high-end consumption, as well as reduce the investible surplus of high-income individuals, whose money was the mainstay of mutual funds, PMSes and the midcap segment.”  

Some other factors, which continued to have a negative impact on the markets were fears around squeeze in secondary market liquidity due to proposed higher public shareholding norms.  Also, experts opine that, fears related to prolonged slowdown in consumption also led to sell-off in autos and NBFCs today. Auto companies like Maruti Suzuki, Hero Motocorp and Tata Motors traded between 2% and 5% lower than usual. Another major factor, which the market discounted, is the corporate earnings, which would begin from July 9 with IT bellwethers, TCS posting its first quarter result for FY2020. 

Ajit Mishra Vice President, Research, Religare Broking said, “the market tone is clearly negative and Nifty could inch further lower and test 11,400 ahead. Earlier, it was only the broader indices which were reeling under pressure and now the benchmark index has also joined in. With the beginning of the earnings season, participants will be closely eyeing the result of IT major, TCS result on Tuesday i.e., July 9. We advise maintaining “sell on rise” approach and preferring hedged positions.”