Sensex plunges 2,000 pts in two hours as Budget rally fizzles out. Adani Enterprises plunges 30%, Adani Ports 25%

Even as the Budget managed to impress Dalal Street analysts, the Sensex rally fizzled out, with the BSE index falling over 700 points at one point, down about 2,000 points over its day’s high of 60,773.44. Adani group shares plunged up to 30 per cent, weighing on investor sentiment. Add to that was the nervousness ahead of the outcome of Federal Reserve’s two-day policy review later today. Benchmark indices fell despite the fact that global peer markets were trading higher by up to 1 per cent.   

From a day’s high of 60,773.44, the 30-pack Sensex hit a low of 58,816.84, down 1,956.60 points. It eventually closed the day at 59,708.08, up 158.18 points or 0.27 per cent. The NSE barometer fell 46 points, or 0.28 per cent, to close at 17,616.30. This index hit a high of 17,972.20 earlier today.

“At one point during the Budget presentation, Sensex had vaulted nearly 1,200 points, but a rout in the Adani group stocks and nervousness ahead of the important Federal Reserve meet on interest rate punctured the rally and saw key indices ending mixed,” said Shrikant Chouhan of Kotak Securities. 

Banking and financial stocks took a big hit, with shares of Bajaj Finserv, SBI, IndusInd Bank losing 5-6 per cent. Among 3,649 actively trading stocks for the day, 2,2269 ended in the red. A total of 119 stocks hit lower circuits.

“A well-tuned budget with strong  emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting. Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool,” said Vinod Nair, Head of Research at Geojit Financial Services.

Adani Enterprises plunged 25 per cent to Rs 2,231.25. Adani Ports also plunged 25 per cent to Rs 459.60. Ambuja Cements fell 18 per cent to Rs 332.65. A Bloomberg report suggested that Credit Suisse Group AG has stopped accepting bonds of Gautam Adani’s group of companies as collateral for margin loans to its private banking clients, a sign that scrutiny of the Indian tycoon’s finances is growing after allegations of fraud by short seller Hindenburg Research.

“The budget received a big welcome from the market and the public initially, but soon, the market gave up most of the gains. The implications of the tax regime changes are also being widely debated as they might not have a large impact on the middle-class tax payer in the long run,” said Sonam Srivastava, Founder at Wright Research.

Also read: Avanti Feeds, Apex Foods shares rally 8% as FM announces sub scheme under PM Matsya Sampada Yojna

Also read: Tata Steel, JSW Steel, Jindal Steel shares climb up to 6% as FM extends duty exemption on inputs