Business | Markets
Global selloff and budget blues hit BSE
Indian shares fell 4.01 per cent yesterday to their lowest close in four months, dragged down by a global stock market selloff and a budget that raised levies on some cement and widened the tax net for software services.
- Reuters
- Published: 00:00 March 1, 2007
Mumbai: Indian shares fell 4.01 per cent yesterday to their lowest close in four months, dragged down by a global stock market selloff and a budget that raised levies on some cement and widened the tax net for software services.
In the budget, the government said it would use tax revenue generated by a booming economy to raise spending on health and education, and focussed on boosting the flagging farm sector to ensure growth included hundreds of millions of poor.
The 30-issue BSE Sensitive index (Sensex) fell 540.74 points to 12,938.09, led down by software stocks, with 29 of its components losing ground as it posted its lowest close since October 27.
The index has fallen almost 1,100 points in the last four sessions. It was the index's biggest percentage fall since June 13, 2006, and it ended 12.1 per cent off its lifetime high of 14,723.88 hit on February 9.
Index-heavyweight Infosys Technologies, India's second-largest software exporter, fell five per cent to Rs2,078.35, while larger rival Tata Consultancy Services shed 6.1 per cent to Rs1,188.45.
"The market fall was in line with global markets, but the budget was quite disappointing, and that's the reason why the market didn't recover," said Abhay Aima, head of equities at HDFC Bank.
Employee stock options will be liable for fringe benefits tax, and increase in tax on dividend distributed by companies to 15 per cent from 12.5 per cent also weighed on the market.
Impact
"It's negative and could have significant impact," Sandeepa Vig Arora, vice-president at brokerage Indiainfoline, said of the dividend tax. "It's technically double-taxation."
Top cement makers Grasim Industries, ACC Ltd and Gujarat Ambuja fell between 5.1 and 7.8 per cent after the finance minister, striving to control inflation, raised taxes by 50 per cent to Rs600 per tonne on cement sold for more than Rs190 per 50 kilogramme bag.
Adding to the sentiment, Asian stocks skid yesterday as a global sell-off that started in China on Tuesday gathered steam after Wall Street stocks shed more than three per cent. But China's main stock index gained almost four per cent yesterday after falling 8.8 per cent on Tuesday.
In the broader Indian market, 1,949 losers outpaced 588 gainers on volume of 325.4 million shares.
The NSE index lost 3.82 per cent to 3,745.30, its lowest since December 12.
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