July 20 (AZINS) A weak start to the earnings season, concerns of super-rich tax on foreign portfolio investors (FPIs) dented domestic equity market sentiments on Friday.

Key benchmark indices fell over 1% after the Parliament passed the Finance Bill for the current fiscal without any amendments on Thursday, hurting investors sentiments.

S&P BSE Sensex fell 626.11 points intraday to 38271.35, before recovering slightly and closing 560.45 points, or 1.44% lower at 38337.01, marking the worst single day decline since July 8. NSE Nifty 50 also breached 11,400 level in intraday trade as it touched a low of 11399.30 before closing 177.65 points, or 1.53% lower at 11419.25.

Passing the Finance Bill without any amendment indicate that the higher tax surcharge proposed for the super rich category in the Budget will not be rolled back despite being requested by the forum of FPIs.

Of the 30-stock Sensex, 26 stocks ended in red, with finance and auto stocks witnessing sharp sell-offs. Major losers during the day are Mahindra & Mahindra, Bajaj Finance, Tata Motors, Hero MotoCorp, IndusInd Bank and Yes Bank, losing up to 4.36%. NTPC, Tata Consultancy Services, ONGC and Power Grid Corporation reported gains up to 2.20%.

Among the 11 sectoral indices, all witnessed profit-booking, led by Nifty Auto (-3.31%), followed by Nifty Media (-2.51%), Nifty Private Bank (-2.45%) and Nifty Pharma (-2.23%).

Broader market indices underperformed key benchmark indices. S&P BSE MidCap and SmallCap fell 1.99% and 1.83%, respectively, while NSE Nifty Midcap 50 and Smallcap 50 fell 2.15% and 2.09%, respectively. Midcaps and smallcaps usually have a chunk of participation coming from the high networth individuals (HNIs) or super-rich investors.

Deepak Jasani, head of retail research, HDFC securities said the markets ended sharply lower on Friday, with the main indices closed at a two month low in the process.

"The losses came despite positive global cues. The finance minister dashed hope of a tweak in FPI surcharge on Thursday. Continued asset quality concerns in Q1 also spooked markets," Jasani said.

According to him, a series of unexciting results for Q1FY20, reinforced expectations that India Inc's corporate earnings are not going to revive in a hurry.

"A general sense of despondency among institutional and non-institutional players seem to be dragging down the markets," he added.

Dharmesh Shah, head – technical, ICICI Direct said, "Benchmark indices extended decline for second successive week amid disappointing earnings of some companies. For first time since October 2018, index has retraced its preceding major rally by more than 61.8%, indicating extended consolidation going ahead."