Nifty Wipes Out Its 2019 Gains

On Monday morning, India's two stock market benchmark indices opened lower. NSE's Nifty 50 as well as BSE's Sensex fell 1.4 percent to 10,838.65 and 36,593.32.

This extends the losses these indices saw last week. Following US president Donald Trump's threats on imposing additional tariffs on Chinese goods, the markets slumped with Nifty 50 wiping out its gains made in 2019 so far, and Sensex hitting a five-month low. The decline in the indices was a reflection of its global peers wherein Asian markets were trading lower after on concerns over escalation in tensions between the US and China.

Following the Budget 2019 presentation on 5 July, BSE listed companies have collectively lost over Rs 15 lakh crore upto last Friday. Sensex and Nifty fell 10 percent during the period.

Disappointment over surcharge on investor earnings, weak auto sales, not so encouraging corporate quarterly earnings results and ongoing credit crunch have further added to the Indian market conditions apart from the existing concerns over global economic slowdown.

Foreign Portfolio Investors (FPIs) net withdrawals in the cash market was to the tune of nearly Rs 20,500 crores, since 1 July.

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.

The Economic Times report said that FPIs through their law firms had conveyed to the Finance Ministry that it would be impractical for them to convert trusts into companies.