Benchmark equity indices opened weak on Monday, as Dalal Street continued to react to Budget fine prints even as stronger jobs data in the US dashed hopes of aggressive rate cuts by the US Fed and geopolitical tensions in West Asia triggered a spike in crude oil prices, driving the rupee lower.
Asian markets fell up to 2 per cent on fears that foreign inflows may ebb. For the domestic market, concerns over another fraud at PNB and proposed revision in minimum shareholding norms weighed on investor sentiment.
Money managers and heads of research at domestic brokerages in an ET poll said Nifty is likely to see limited upside or could possibly drift lower by Diwali.
Going by the buzz on Dalal Street, here is a list of five factors that seem to be dragging the market low ..
Budget proposals: A Budget proposal to increase minimum public shareholding of listed companies to 35 per cent from 25 per cent spooked market sentiment. Going by history, such a proposal will get implemented over a time frame of 1-2 years. It depends on how Sebi wants to implement the process and the stringency with which it seeks to enforce such a deadline, Edelweiss Securities noted. Besides, the Budget proposed a 20 per cent tax in case on buybacks, which may dry up share repurchases in the market. ET reported this morning that the hike of income-tax surcharge on high net worth individuals may hit some 2,000 overseas funds, as foreign portfolio investors in India are structured either as trusts or association of persons, or AOP.
Source: Economic Times
