Mumbai: Indian equities turned deeper into the negative territory as a lack of stimulus from the government in its annual spending plan unveiled Friday and additional tax on high income spooked investors.
The benchmark S&P BSE Sensex slid 0.7% to 39,649.25 as of 2 p.m. in Mumbai, reversing gain of as much as 0.3%. The NSE Nifty 50 Index also dropped by a similar magnitude.
India plans to narrow its budget gap target to 3.3% of the gross domestic product for the financial year that started 1 April compared with 3.4% set in February’s interim plan. That is contrary to expectations that the government will spend more to boost a slowing economy. The nation also will levy additional taxes on individuals earning more than Rs 20 million (about $292,000) a year.
- “There’s no big fiscal stimulus plan, quite contrary to what many investors expected and that’s driving the stocks down,” said Vivek Ranjan Misra, head of fundamental research at Karvy Stock Broking Ltd. in Hyderabad. “To add to it, more levy on high net individuals has hurt sentiments further.”
- “India has limited options to boost growth, exports, and the farm and manufacturing sectors,” said Jigar Shah, head of research at Maybank Kim Eng Securities India Pvt. in Mumbai. “Earnings growth for Indian companies will be challenged by the slowing economy and other headwinds.”
- Fifteen of the 19 sector indexes compiled by BSE Ltd. declined, led by a gauge of power stocks.
- Twenty-two of the 31 Sensex members and 36 of the 50 Nifty stocks dropped. –Bloomberg