With the declaration of Union Budget 2018, share markets registered its one of the steepest falls in years. Thus, affecting the sentiments of the investors over the government’s proposal of 10% tax on long-term capital gains on equity profits above Rs 1 lakh. The dropping performance can be witnessed clearly in just three sessions post declaration of Budget 2018 on February 1, 2018.
Indian Government responded to this saying that it was not in reaction to the Union Budget 2018 or the re-introduction of Long-Term Capital Gains (LTCG) tax , but due to global factors. Our experts believe it to be a rewarding time for the ones who are planning their entry in the market as well as for the existing investors.
Find out here the major changes that occurred after Budget announcement, and what should the investors do.
What Were the Major Changes?
In response to the Budget announcement, there were significant changes in the market. Some are telling that it might be the phase of the long-awaited market correction; however, some are still skeptical about the situation stating that it’s the time that will depict the clear state.
Sensex Experienced the Biggest Fall in Two Years, Plummets Nearly 1200 Pts
Meanwhile, the benchmark BSE Sensex dropped by approximate 1275 points( about 3.6 per cent in the opening trade); thus investors in India lost around Rs. 9.6 lakh crores amid sell-off in the global market.
The overall market capitalization of BSE listed companies eroded by Rs 9,60,938 crore to Rs 1,43,39,062 crore in three days. According to the figures, about 2,221 stocks declined in the BSE, where about 169 of the advanced ones and 83 others remained unaffected.
In response to the situation, Finance Secretary, Hasmukh Adhia said “What happened on Feb 2 & Feb 5 was mainly because of the global shake-up. We aren't living on an island so there will be a ripple effect of what is happening in the world on Indian stock markets. Otherwise, the Sensex & NSE would have come down on the first day itself.”
Nifty 50 was all red too, in the list of companies HDFC Bank, ICICI Bank, as well as Tata Motors lead the fall. Shares plunged across the Asian Countries due to the effect of the wild day for the US markets, and this resulted in the steepest drop in the Dow Jones industrial average since the year 2011.
Rupee Value Plunged by 23 Paisa
The tumble leads to the decline in the rupee value hovering it nearly one and a half month low at 64.30 against the dollar on sustained bouts of dollar demand from the importers as well as banks surrounded by the rapid sell-off in local equities. The US dollar stood intact and strong against its major competitor in early Asian trade as a rout in equities at the global level, and this condition prompted cautious investors to reduce their exposure to riskier assets.
Expert’s Viewpoint: Is it the Right Time to Buy?
The pace with which markets are showing jaw-dropping sell-off on Wall Street has left investors as well as traders bumped and bruised. Still, experts believe that the period in local markets is just a mimic of the global correction.
Studying the market scenario, it is believed that this market correction looks more frightening than in reality because there was no major tumbling in the last year. However, with the earnings recovery, it can also be said this correctional phase is indeed a good opportunity to buy from a two-three year perspective. It is also in the air that there will be more corrections in non-quality large cap funds , whereas it is a good time to invest in large-cap as well as some of the good performing mid cap funds .
Furthermore, for investors with surplus funds and time-frame of a year or two, this phase is considered to be favorable to increase allocation in equities as the market is showing meaningful correction after long.
Bottom line is that the investors should grab this dip in their favour, thus by making more purchases but in the selective and quality funds.
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