Benchmark indices fell in trade today, led by heavyweight stocks like HDFC Bank and HDFC. Despite the huge surge of 9.74 per cent in Reliance Industries, the benchmark indices ended sharply lower.
The Sensex was trading with with losses of 623 points, while the Nifty tumbled 187 points in trade. Shares in HDFC fell more than 5 per cent, while HDFC Bank fell in excess of 3 per cent and both these stocks are heavyweights, which pulled the indices lower.
Reasons for the fall
Fresh selling may have been triggered in select Foreign Portfolio Investors favorite stocks on lack of news pertaining to the withdrawal of surcharge on income tax levied, which was hoped for over the weekend. It maybe recalled that late last week there were reports that the government was looking to withdraw the surcharge levied on the super rich in the Union Budget of July.
Some Foreign Portfolio Investors, who are treated as trusts would have to pay this surcharge. They have been constantly dumping Indian stocks since the Union Budget on fears their returns would be lower on account of the surcharge.
The big losers
The biggest losers from the Nifty and the Sensex was Yes bank, which fell a huge 10 per cent in trade.
After a brief respite of two days, in which auto stocks recovered, today they saw a fresh round of selling. Maruti Suzuki, Hero Motor Corp and Mahindra & Mahindra saw cuts ranging from 2 to 6 per cent.
The big fall in HDFC and HDFC Bank left investors stunned.
Economic growth tepid
Growth rates in the Indian economy has been rather tepid. Auto sales have declined sharply, while most other sectors are reeling. India's domestic passenger vehicle sales in July dived at the steepest pace in nearly two decades, an auto industry body said on Tuesday, as a financing crunch deepened a crisis in the country's autos sector and triggered large-scale job losses.
Global cues were also weak with the German DAX shedding 0.95 per cent, while the French CAC was down 0.46 per cent.
Dow Futures were pointing to a lower opening for the US markets.