Bears hammer down Sensex to new low | india | Hindustan Times
Today in New Delhi, India
Oct 18, 2017-Wednesday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Bears hammer down Sensex to new low

THE BEARS were in complete control of the proceedings on D-Street on Thursday. The result: the Sensex broke all technical support levels to fall by over 800 points, the biggest fall in the history of Indian stock markets.

india Updated: May 19, 2006 13:28 IST
ARUN Kumar

THE BEARS were in complete control of the proceedings on D-Street on Thursday. The result: the Sensex broke all technical support levels to fall by over 800 points, the biggest fall in the history of Indian stock markets.

After recording an intra-day fall of 888 points, the Sensex closed at 11,391 as against the previous close of 12,217 — a loss of 826 points (7 per cent).The NSE Nifty lost 246 points at 3,389 after touching a high of 3636.45.

Mirroring global trends after a major fall in the US market on Wednesday, Asian markets saw a sharp fall but the one in India was the biggest.

The Nikkei went down by 1.35 per cent, the Hang Seng by 2.1 per cent, the Kospi by over 2.59 per cent and the Jakarta Composite by over 4 per cent.

Nand Kumar Surti, CIO, Lotus Mutual Fund, said, "India reflected what happened in the rest of the world. There is evidence to support the theory that India's fall is more than the rest of emerging markets."

Another big factor contributing to the fall was the proposed Central Board of Direct Taxes (CBDT) guideline on capital gains tax on stock-market transactions.

Experts said the guideline was totally ambiguous and gave wide discretionary powers to the assessing officer. It affects not only FIIs but also ordinary investors who buy in the secondary market.

Under this provision, once an investor is termed a trader, there’s no provision for them to hold long-term investment. Such "trader" investors who sell shares totalling Rs 40 lakh will be required to get their accounts audited. Experts said the provision was not prospective but could be retrospectively enforced by the officer and penal provisions for non-auditing be imposed.

Clearing the air, Finance Minister P. Chidambaram said no FII had been assessed as a trader — scotching market talk that tax rates could be raised for them. "No FII has been assessed as a trader but as an investor because they've no permanent offices in India," he said when asked about the fall in the stock market.

But fund managers said the government should have come out with the clarification during trading hours. S.P. Tulsian, a financial adviser, said the Indian market had been in correction mode. "The government -- through a notice on CBDT website -- proposed to tax FIIs or ordinary investors at the rate of 41 per cent as against the current zero tax for long-term investors of over one year or at most 10 per cent for short-term investors," he said. "This certainly changed the entire matrix."