Why Did Nifty Share Price Slipped to its Brexit Low?

The day next to Christmas did not bring much joy to the Indian stock market. Right from the early trading hours today, the market showed signs of decline in the middle of the ongoing buzz that the government may impose taxes on long-term capital gains from trading in shares.

Currently, in India, the long-term capital gains on stocks and equity mutual funds are not taxed. But, the short term gains will be taxed at 15 per cent.

On Saturday, the Prime Minister of India Narendra Modi said the market participants should contribute to nation building in a "fair, efficient and transparent way" as well as promised more "sound and prudent policies and reform measures", which was observed in some quarters as a prelude to a higher taxation by way of long-term capital gains tax on investment in the share market.

However, finance Minister Arun Jaitley on Sunday, 25th December 2016, clarified that the government has no such plans. But the investors were already a nervous lot and this triggered selling on Monday (today). This resulted in the benchmark index fall for the eighth time in nine days to extend the last week’s losing spell.

The Foreign capital outflows were seen to continue, tracking other global markets and the investors believe equities to remain volatile in the near term since most of the foreign funds will be on year-ending holidays amid absence of any major market trigger.

Cipla share price took the biggest knock as it plunged by 4.94 per cent followed by Lupin 2.78 per cent, Tata Steel (2.64 per cent) and both ONGC and SBI (2.07 per cent).

From the gainers pack, HUL gained the most by rising 1.25 per cent, Bharti Airtel 0.25 per cent and Tcs 0.17 per cent. Meanwhile, foreign funds sold shares worth Rs 1,462.65 crores last Friday (23rd December 2016), as per the provisional data.

Among the individual sectors of the market, metal and realty stocks took the biggest hit with their respective sub-indices falling 3 per cent and 3.64 per cent respectively.

Major Asian indices were down as investors cashed in on a recent global rally fuelled by expectations from the incoming administration of US President-elect Donald Trump. Japan’s Nikkei shed 0.16 per cent but Shanghai Composite rose 0.40 per cent.

Length and breadth of the market remained negative almost throughout the day. Not only Nifty, the BSE Sensex fell 234 points to end at 25,807, its lowest level since November 21, 2016 and the Nifty closed 77.5 points lower at 7,908.25.

Nifty share price (future) went to break the Brexit low of 7927. It made a low of 7896 and closed at 7917.

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