why indian share market is going down
The Sensex and Nifty tumbled off their day's highs during the last hour of trade. While the Sensex fell 453 points to 33,149, the Nifty was down 134 points to 10,226 level. The indexes extended losses in morning trade with the Sensex opening nearly 150 points lower and Nifty falling 60 points to 10,315 level. Kotak Mahindra Bank (2. 63%), SBI (2. 54%) and Reliance Industries (2. 42%) were the top losers on the Sensex. Of 30 Sensex stocks, only Dr. Reddy's (0. 45 percent) and NTPC (0. 36 percent) closed in the green. We look at why Sensex and Nifty fell today. Widening fiscal deficit: Fiscal deficit for the April - October 2017 period widened to Rs 5. 25 lakh crore, or 96. 1 percent of the budgeted target for the current fiscal year that ends in March 2018. Compared to the same period an year ago, the deficit was 79. 3 percent of the full-year target. Fiscal deficit is the difference between total revenue and total expenditure of the government. Futures and Options expiry: Market entered the bearish phase today, amid nervousness prevailing since opening ahead of the derivatives expiry today. Experts also cited high valuations as a reason for market fall. "Markets are at quite a high level in terms of valuations; so some amount of correction is normal to expect," said Deepak Jasani, head of retail research at HDFC Securities.
Banking stocks: The BSE Bankex shed 548 points or 1. 88 percent with all 10 components closing in the red. PNB, SBI and Kotak Mahindra Bank were the top losers. The Bank Nifty too fell 1. 80 percent or 463 points to 25,332 level. All 12 Bank Nifty components ended in the red. Asian markets: Indian markets tracked their Asian counterparts since early morning today. In afternoon trade, the Sensex and Nifty extended losses with Asian markets too losing steam. Taiwan Se Weighted Index closed 1. 43 percent or 153 points lower to 10,560 level. Hang Seng too fell 446 points followed by Shanghai SE Composite index which was down 20 points to 3317 level. The Nikkei 225 was the only exception, gaining 127 points to 22,724 level. North Korean tension: Geo political tension continued to weigh on the global arena after Pyongyang test fired its most advanced missile on Tuesday, putting the US mainland within range, in violation of UN Security Council resolutions. In response, the US warned North Korea's leadership it would be "utterly destroyed" if war were to break out after the missile test.
State media in North Korea said on Wednesday the intercontinental ballistic missile (ICBM) was launched from a newly developed vehicle in a "breakthrough" and that the warhead could withstand the pressure of re-entering the atmosphere.
Market analysts fear large scale selloff if there is no clarification by 3. 30 pm, when the markets close. 1) Volumes drop : The rollovers are lagging the 6-month average by $1 billion. A rollover is when investors reinvest funds from a mature security into a new issue of the same or a similar security. 2) Arbitrageurs in a fix : Arbitrageurs have to decide on futures and options (whether close or rollover F O) positions by 3. 30 pm. Arbitrageurs are experienced investors who exploit price inefficiencies to make risk-free profits. Arbitrageurs may be forced to sell underlying cash positions in Indian stock markets in the absence of clarity over GAAR. Brokerage firm Barclays has said that arbitrageurs may have no choice but to sell cash positions in the last 30 minutes today. If arbitrageurs' futures positions via P-Notes are closed, selling in cash positions is likely. 3) Sebi says it has no role in the issue : Market regulator Securities and Exchange Board of India (Sebi) has told NDTV Profit that it has limited role to play in the P-Note/FII taxation fiasco.
Though Sebi officials are in touch with Finance Ministry over the issue, any clarification will have to come from the Fin Min. Sebi is keeping a close watch on all FII P-Note transactions. 4) Foreign Banks may stop issuing P-Notes : Foreign banks that deal in P-Notes say they will not issue fresh P-Notes from Monday unless clarification comes. If they do issue, it will be issued with withholding tax. CLSA, a major brokerage firm and investment bank, has stopped selling P-notes. 5) Finance Minister unlikely to intervene : Pranab Mukherjee has already made a statement in Parliament about GAAR so any official clarification is unlikely today. Sources in the Finance Ministry have told NDTV Profit that any clarification or amendment on GAAR will come only between 24 April and 1 May when the tax provisions of the Finance Bill are debated and voted upon in the Parliament.
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