Budget Day: Sensex cracks 395 points; metal, power stocks sink

The BSE Sensex plunged 395 points on Friday on heavy selling in metal, power, auto and IT counters, after the Budget proposal of raising public shareholding threshold stoked fears about liquidity in the market. Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman said it was the right time to consider increasing minimum public shareholding from 25 per cent to 35 per cent.

After a highly volatile session, the 30-share index ended 394.67 points, or 0.99 per cent, lower at 39,513.39. The index hit an intra-day low of 39,441.38 and a high of 40,032.41.Similarly, the 50-share NSE Nifty sank 135.60 points or 1.14 per cent, to 11,811.15. During the day, the index touched a low of 11,797.90 and a high of 11,981.75.

Barring FMCG index and bankex, all sectoral indices on BSE ended in the red. Yes Bank was the top loser in the Sensex pack, crashing 8.36 per cent, followed by NTPC, M&M, Vedanta, Sun Pharma and TCS, which lost up to 4.81 per cent lower. On the other hand, IndusInd Bank, Kotak Bank, SBI, ITC, Bharti Airtel and ICICI Bank rose up to 2.16 per cent. 

"While we need to await Sebi regulations regarding how much time will be given to these companies to meet with this minimum public shareholding norms, the overhang of this requirement of off-loading of promoter shareholding can have significant impact on the markets and the specific stocks," said Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking.Many PSUs have not been able to meet even the 25 per cent public shareholding norm till now.

"The regulator needs to provide sufficient time to meet this requirement so as not to over-flood the markets with stake sales by promoters," he added. The Budget also proposed rationalisation and streamlining of KYC norms for foreign portfolio investors to make them investor-friendly.

The finance minister said the government will provide one-time partial credit guarantee to public sector banks to buy rated pooled assets of financially sound NBFCs. Sitharaman also said the government proposes to initiate steps for electronic fund raising programme for listing of social enterprises and voluntary organisations. She also announced raising the disinvestment target to Rs 1,05,000 crore in FY 2019-20 as against Rs 90,000 crore set in the interim budget.

Interoperability of RBI depositories and SEBI depositories is necessary for seamless transfer of treasury bills, she said, adding the government will take necessary measures for the same.

The rupee, meanwhile, witnessed a sharp recovery to trade at 68.52 against the US dollar intra-day.Elsewhere in Asia, bourses in China, Japan and South Korea ended on a negative note. Equites in Europe were trading in the green in their respective early deals.The benchmark Brent crude futures were trading 0.52 per cent higher at USD 63.63 per barrel.