Markets erase early gains, metals shed on investor caution over heavy export taxes
Advertisement

Markets erase early gains, metals shed on investor caution over heavy export taxes

By Reuters

  • 23 May 2022
Markets erase early gains, metals shed on investor caution over heavy export taxes

Markets closed lower on Monday after a volatile session, weighed down by a sell-off in metal stocks after the government imposed heavy export taxes on steel products, while gains in automobile stocks helped cap some of the losses.

The Nifty was down 0.32% at 16,214.70 at close, while Sensex fell 0.07% to 54,288.61.

Nifty Metal, which saw its worst day since March 2020 in the session, settled 8.1% lower. JSW Steel and Tata Steel were the top losers on the Nifty, falling 13.2% and 12.6%, respectively.

Advertisement

India on Saturday announced a series of changes to the tax structure levied on fuel and crucial commodities in a bid to help fight surging inflation.

The country imposed an export tax of 15% on eight steel products at a time when steelmakers are looking to make up for tepid local demand by increasing market share in Europe, whose supplies have been hit by Russia's invasion of Ukraine.

"Prospects of additional market borrowings by the government of India in the wake of the tax cuts on fuel to tame inflation came to the forefront," said S Ranganathan, head of research at LKP securities.

Advertisement

However, Reserve Bank of India governor Shaktikanta Das told CNBC-TV18 in an interview on Monday that the government would likely stick to its fiscal deficit target as specified in the budget and there may not necessarily be a need for increasing government borrowing just yet.

"The hawkish monetary and fiscal measures adopted by the RBI and the government will have a cascading effect on market & economy in the short to medium-term," said Vinod Nair, head of research at Geojit Financial Services.

Nifty Auto rose 1.8%, as automakers stand to benefit from lower input costs following the tax changes. Maruti Suzuki and Mahindra and Mahindra were the top Nifty gainers, rising 4% each.

Advertisement

Among individual stock moves, Divi's Laboratories and TTK Healthcare Ltd fell 9.5% and 10.5%, respectively, after their quarterly results.

Share article on

Advertisement
Advertisement
Google News Icon

Google News

Follow VCCircle on Google News for the latest updates on Business and Startup News