Disappointment over the Budget proposals and muted global markets led the Sensex to log the heaviest fall in seven months on Monday. Both the key equity indices -- Sensex and Nifty -- fell over 2 per cent.
The shares of Hero MotoCorp, Bajaj Finance, ONGC, State Bank of India and Larsen and Toubro saw a major dip. The 30-scrip Sensex closed 792.82 points or 2.01 per cent lower at 38,720.57 and the broader Nifty50 declined by 252.55 points or 2.14 per cent to 11,558.60.
Among the Nifty50 benchmarks, Nifty PSU Bank saw the maximum fall of about five per cent, whereas Nifty Bank, Nifty Auto, Nifty Fin Service and Nifty Realty indexes were trading red with a fall of two per cent.
The global market saw the S&P BSE MidCap trading at around 14450 levels with a deep cut of 266 points whereas the S&P BSE SmallCap was trading at 13,803 levels with a nose dip of 338 points.
Here are the reasons behind the sudden market downfall:
The proposals by the Modi government in the Budget 2019 have annoyed the investors. The increase in the minimum public shareholding of listed companies from 25 per cent to 35 per cent has created a revolt within the companies and direct investors. Other proposals like taxation of 20 per cent on buybacks have raised concerns about the repurchasing value of the stake of major companies. As per an Economic Times report, the proposal of the income tax hike on high net worth individuals will affect 2,000 global funds.
US jobs data
The US saw the ugliest slowdown in their job hiring in May, as per a Reuters report. The sudden slowdown has resulted in dashing the hopes of rate cuts by the US Fed. The largest employers could only employ about 2,24,000 people last month.
The rupee and crude oil competition
The US job data pulled down the oil markets, the value of rupee and other market currencies against the US dollar. The value of rupee to dollar fell by 21 paise to 68.63.