Sensex lost over 850 points in past two sessions as the government ruled out any possibility of a roll-back of increase in tax surcharge for the super-rich in the Budget.
Since, July 5, when the Union Budget was proposed, Foreign Portfolio Investors (FPIs) have been in a sell mode, but it intensified after Finance Minister Nirmala Sitharaman on Thursday made it clear, the super-rich tax is here to stay.
FIIs have sold of Rs 6,475.55 crore worth of stocks in June, till date, the most in a month in 2019. The selling was most intense on Thursday (Rs 1,404.86) and Friday (Rs 950.15) after Sitharaman dashed hopes of any relief to FPI's in her reply to debate on Budget proposals in the lower house.
Sensex finished Monday's trade 305.88 points lower at 38,031.13 while the broader Nifty closed 82.10 points lower at 11,337.15. The Sensex had shed 560 points on Friday.
HDFC fell by about 3% in trade on Monday after it reported a rise in non-performing assets (NPAs) to Rs 11,768.95 crore. Other stocks such as IndusInd, ONGC, HUL, Bajaj Finance, Bharti Airtel, ICICI Bank also fell.
Vinod Nair of Geojit Financial Services suggested further pain saying "this correction has expanded to large caps which until now were attracting FII inflows, but concerns over tax and muted Q1 results will continue to impact..."
"Market entered into a bearish phase as investors turned sellers due to concerns over extension of economic slowdown and weak corporate earnings hurting the sentiment," Nair added.
According to an Economic Times report, some of the factors behind the fall in Dalal Street were the heavy FII outflow following no respite from the FM on the â€˜super rich taxâ€™. There were global factors too, such as the expectations of an aggressive US rate cut. Increasing oil prices amid high tensions after Iran seized a British Tanker also led to a selloff in the markets today.