Panic spread in the stock market before the budget

Ahmedabad. Thursday, January 28, 2021

The stock market's main index fell for the fifth day in a row today on fears of a tax hike as the budget approaches. This is the first consecutive decline in the index since September. Most of the world's markets have declined in the last one week, but Indian markets have been the biggest loser.

The BSE benchmark index fell by 7.5 points to 7.5 today. It has broken around 2000 points from the top level of 2017. In one week, it has fallen by 4.5 per cent. The Nifty was down 120 points today and fell to 1912. It has broken around 1000 points from the top 12 level. In one week, it has broken 4.50%. In five trading days, the market capitalization has eroded by Rs 4.5 lakh crore as against Rs 19.50 lakh crore.

Experts say investors are worried that Finance Minister Nirmala Sitamaran, who is facing shortages on the revenue front, may change the tax on capital markets to meet the deficit. The central government is really struggling with a lack of tax collection and revenue has declined due to low dividends and delays in disinvestment.

The next budget will be challenging for the government and tough decisions like higher taxes will be taken, which could affect consumption, market study circles said. This is the reason why there is panic in the market before the budget.

Most of the positive news has already had an impact on the market, which has seen an increase of about 3 per cent since November. The market has seen good growth recently so it was likely to decline. The results of the companies have been good but this time it has not benefited the market.

Several emerging markets, including India, touched record highs this month in hopes of a relief package in the US. Delays in President Biden's announcement of a ૯ 1.3 trillion relief package have dampened investor sentiment around the world. In addition, the re-lockdown in many places due to the spread of Corona virus has also had an adverse effect on the stock market.

According to reports, speculative activity in some of the hot favorites in the US stock market is a matter of concern. The Securities and Exchange Commission added that such stocks are on the market and under their watch. This type of activity has led to increased volatility in the market.

Study circles added that the bearish sell-off in the market as well as the panic-stricken sell-off by small investors have fueled the downturn.