New Delhi : The government on Friday denied that the Union Budget, presented a day earlier, was the reason for the market crash of over 800 points, but conceded that there could be “some anxiety” that triggered it.
Economic Affairs Secretary Subhash Chandra Garg said it needed to be figured out as to what were the reasons behind Friday’s crash, the biggest since November 2016. “Yesterday there may have been some impact of Long Term Capital Gains (LTCG) Tax. It was expected. We need to figure out (reasons for Friday’s crash)… Maybe portfolio reshuffling has started, maybe some anxiety is there,” he told IANS. “Today there was no Budget announcement,” he said, when asked if the sharp drop in stock prices was influenced by the Budget announcements especially the LTCG tax of 10 per cent on shares and upward revision of the fiscal deficit target. He also ruled out any possibility of downgrading by rating agencies of the Indian economy in the light of burgeoning fiscal deficit. Garg also said the Indian economy had clearly made a turnaround but touching double-digit growth was not on the horizon. “Double-digit growth in this environment of global low growth rates seem to be very, very far,” he added. The BSE market breadth was bearish as 2,548 stocks declined while 295 advanced. Tthe S&P BSE mid-cap index dipped by 4.03% and the small-cap index by 4.65%. “Markets corrected sharply on Friday as selling intensified during the day. Investors seemed to be disappointed with the fiscal deficit numbers and introduction of LTCG tax,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS. “Negative global cues also spoiled sentiments. Major Asian markets have closed on a mixed note. European indices like FTSE 100, DAX and CAC 40 were trading in the red,” he added.
Investors became poorer by Rs 4.6 lakh crore on Friday. “…Investors were disappointed with LTCG coming in over and above STT…” Anita Gandhi, Whole Time Director, Arihant Capital Markets, told the PTI.
