Reasons for free fall of budget
The first trading session of the equity markets after the Union Budget saw stocks in a free-fall mode as a mix of global factors and domestic concerns emanating from some of the proposals in the Budget spooked investors.
The government’s proposal to levy a surcharge on the high-income group coupled with the tax on buyback and increase in public holding in listed entities dampened investor sentiments, while the overall negative trend in emerging markets on account of a robust U.S. jobs data lowering the prospect of a rate cut by the Federal Reserve further played spoilsport.
The 30-share Sensex fell nearly 910 points during intraday trading to touch a low of 38,605.48 before marginally recouping some of the osses to close at 38,720.57, down 792.82 points or 2.01%.
The broader Nifty ended the day at 11,558.60, shedding 252.55 points or 2.14%. Further, the India VIX index, which is looked upon as a barometer of near-term volatility, gained over 6% on Monday.