Indian equity benchmarks have given up half the gains since their corporate tax cut-fuelled September peak amid macro worries.
The Nifty 50 index, which surged to a two-month high of 11,600 on Sept. 23 after the tax bonanza, is now below 11,200 points. The S&P BSE Sensex index, which hit 39,097, is now down nearly 1,400 points since its Sept. 24 high.
On Friday, Sensex fell 1.14 percent to 37,673.31 points and Nifty shed 1.23 percent to 11,174.75 after the Reserve Bank of India cuts its repo rate for the fifth time this year.
“The economy is actually waiting for the transmission of the RBI rate cuts to the last mile. Likewise, the initiatives taken by the government of providing tax cuts has not resulted in demand creation. New NPAs continue to resurface. All these seem to have disappointed the market participants,” said Sunil Shah, portfolio manager at Turtle Star. “However, as positive indications come on account of festive season and monsoon, markets could then take the next course of action.”
For Nifty, bulk of the gains came from index heavyweights HDFC Bank Ltd. and Reliance Industries Ltd., which together accounted for over 200 points on the index.
The remaining three stocks in the top five—ITC Ltd., Larsen & Toubro Ltd. and Kotak Mahindra Bank Ltd.—added another 100 points. Infosys Ltd. and State Bank of India were the top laggards as they shaved 61 points from the index.
The Nifty Midcap 100 index is down 1,165 points from its peak of 16,745 on Sept. 23. The Nifty Smallcap 100 index is trading below the closing price of Sept. 19, a day before the corporate tax cut was announced.
In the mid-cap space, Info Edge (India) Ltd. and Berger Paints India Ltd. were the top two gainers, adding a combined 91 points to the index.
Gains in Indian Hotels Company Ltd., GlaxoSmithKline Consumer Healthcare Ltd. and Cholamandalam Investment & Finance Company Ltd. also helped push the index higher. However, a sharp drop in banking and financial stocks like RBL Bank Ltd., Indiabulls Ventures Ltd. and Edelweiss Financial Services Ltd. pulled the index lower by over 100 points. Tata Power Ltd. and Rural Electrification Corporation Ltd. were the other top laggards.
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