Following the massive Foreign Portfolio Investors sell-off, Indian stock market's valuation lost its $2 trillion market capitalisation (m-cap) for the first time in 6 months. The investment withdrawal that was triggered by the announcement of the super-rich cess on 5 July. Investors lost an estimated 8.8 percent in asset valuation in the previous month.

The total valuation of all the listed companies in India fell to $1.97 trillion on Friday (closing time), falling below Germany's market cap.

The highest contributors to the market erosion were stocks of ONGC, SBI, L&T, Axis Bank and Coal India.

India entered the $2 trillion market cap club of 8 countries in May 2017 for the first time and slipped briefly in February. In June 2019, the m-cap hit an all-time high of $2.24 trillion on hopes of the BJP-led NDA government's re-election.

India had overtaken Germany to gain the position of the seventh largest stock market in the world. It now stands at the ninth position following the sell-off. Canada currently holds the seventh position, followed by Germany. Canada had overtaken India in November 2017.

Among the top 15 countries, only South Korea and India lost market cap in 2019. Despite the trade war, China and the US saw a significant gain in their stock markets.

The Finance Ministry will be hold a meeting with the FPI representatives to address their concerns.

In the Budget 2019, Finance Minister Nirmala Sitharaman had proposed a higher surcharge on those earning over Rs 2 crore. Since the tax implications cover individuals or HUF or association of persons or body of individuals (domestic or foreign), the tax impact on profit from sale of equity rose to 21.3 percent from 18 percent for short-term capital gains, and to over 14 percent from 12 percent for long-term capital gains.

It was said that the higher surcharge would impact FPI who fall in the individuals, associations of persons or trust and not those in the corporate structure.

FPIs, through their law firms, had conveyed to the Finance Ministry that it would be impractical for them to convert trusts into companies for a tax-advantage.