Business

Sensex In Free Fall As Modi Govt's Reforms Get Delayed

NEWS WORLD INDIA | 0
365
| May 14 , 2015 , 13:04 IST
[caption id="attachment_14669" align="aligncenter" width="745"]Defying gravity, markets went into a free-fall with stock benchmark Sensex crashing 630 points to below 27,000-mark. Defying gravity, markets went into a free-fall with stock benchmark Sensex crashing 630 points to below 27,000-mark.[/caption] Defying gravity, markets went into a free-fall with stock benchmark Sensex crashing 630 points to below 27,000-mark and rupee plunged below Rs 64-level on Thursday, as delay in the key GST and land reforms spooked investors. The weakness in global bond markets added to negative sentiments and a sharp plunge in banking and many other key stocks - ICICI Bank, SBI, Reliance Industries, ONGC and Infosys - led to the BSE Sensex plunging over two per cent to close at 26,877.48 points after two days of straight gains. In the process, more than Rs two lakh crore was wiped off from the overall investor wealth, measured in terms of collective value of all listed stocks in the country. The bloodbath in the stock market was primarily triggered by a stiff political opposition to the government's ambitious reform proposals on indirect taxes and land acquisition. In a double-whammy, the government was today forced to send the Land Bill to a joint parliamentary committee, while the Bill for roll-out of long-pending Goods and Services Tax (GST) also got referred to a Select Committee in Rajya Sabha. Traders said that a caution prevailing in the markets ahead of the release of key economic data for inflation and industrial growth added to the negative sentiments. The government released these figures after market hours, showing a contraction in industrial production growth to five-month low level of 2.1 per cent in March, while retail inflation slipped, raising hopes for a rate cut by RBI. Traders said that the deferring of the landmark GST and land reforms spooked the foreign investors in a big way, despite the the government's repeated attempts to assuage their concerns, including on issues arising from levy of the controversial Minimum Alternative Tax. In the currency market, rupee lost 32 paise to a dollar and again fell below the 64-mark, further hurting the investor sentiments. The rupee closed at 64.17 against the US dollar on fresh dollar demand from importers and some banks amidst capital outflows by foreign funds. The 50-share NSE Nifty also slipped below the 8,200-level by plunging 198.30 points to close at 8,126.95. Selling pressure was broad-based, while metal, realty, bank, energy and capital goods stocks were the worst hit. In the bullion market, gold prices however went up as investors rushed for a save haven. In Mumbai, standard gold (99.9 purity) shot up by Rs 250 to end at Rs 27,295 per 10 grams from overnight closing level of Rs 27,045, while at Delhi, it was Rs 27,250 per ten grams.