Weekly Wrap: No Respite For Sensex, Nifty As Slowing Growth, Super-Rich Tax Spook Investors

A trader reacts as he monitors financial information on computer screens. Photographer: Chris Ratcliffe/Bloomberg.

Indian equity benchmarks extended decline for the third straight week as higher taxes on the super-rich and foreign investors, and a slowing economy spooked investors.

The S&P BSE Sensex fell around 2 percent this week to end at 37,137.01 and the NSE Nifty 50 ended at 10,997.35, down 2.5 percent.

The selloff continued this week because of higher taxation on trust entities of foreign portfolio investors, according to Jimeet Modi, founder of SAMCO Securities. The slowdown in the economy added to woes, he said. “We think soon the government may act by diluting the excessive provisions in the law. That may act as a relief. For that matter, any reversal in the budget provisions which were taken negatively by the bourses might bring about a relief rally, arresting the fall.”

Foreign investors sold more than Rs 6,500 crore of stocks during the week, according to data from NSDL and provisional numbers put out the NSE. July saw overseas investors pull out Rs 13,300 crore from equities, turning net sellers after five months.

Active investors seeking higher returns must allocate a good chunk of their portfolio, approximately 30 percent, to gold and lower their equity weight to sail through these testing times, he said.

Ten out of 11 sectoral gauges compiled by National Stock Exchange ended lower this week, led by the NSE Nifty Media Index's 12 percent fall. The NSE Nifty IT Index was the only sectoral gainer, up 0.48 percent.

How Broader Markets Performed

The broader market represented by the NSE NIfty 500 Index fell 2.7 percent, led by the declines in Coffee Day Enterprises Ltd., Bliss GVS Pharma Ltd. and CARE Ratings Ltd.

How Currency Markets Performed

The Indian rupee weakened for the fourth straight week, its longest losing streak since first week of October 2018. The home currency depreciated 1 percent against the U.S. dollar to close at 69.6.

The local legal tender was the fourth-worst performing Asian currency this week.

Big Talking Points This Week

Body of Coffee Day Founder VG Siddhartha found as letter hints at debt woes.
Sensex, Nifty log worst July in 17 years.
Indian equities wipe off $200 billion since Budget.
Retail auto sales continue to slide in July.
Essel Group inks Rs 4,224 crore-deal with Invesco Oppenheimer to sell stake in Zee Entertainment.
37-year-old former school teacher is India's newest billionaire.
SBI slashes deposit rates on easier liquidity.
BQ Survey | Cement prices fall for second straight month.
Vodafone Idea sees dramatic wealth erosion in 11 months.
Prime Minister Modi takes on Bear Grylls' ‘Man vs. Wild'.
Bug in Truecaller app automatically enrolled users for UPI services.
India's fiscal deficit at 61 percent of 2019-20 target in June.
Coal India plans to cut imports by a third.
Electricity usage of up to 200 units is now free in Delhi.
Aswath Damodaran's Jedi Guide to valuing difficult businesses.