The Mumbai Stock Market Index closed 769.88 points, or 2.06%, lower at 36,562.91. The flight of fund-providers was also triggered by the imposition of an additional surcharge on the super-rich, a move that resulted in the withdrawal of more than Rs 30,000 crore or approximately $4.15 billion from the Indian equity market by Foreign Portfolio Investors (FPI) between July and August.
Indian Finance Minister Nirmala Sitharaman announced a slew of measures to revive the economy, but it failed to impress the market sentiments. She also announced the merger of 10 state-run banks to four in order to revive credit growth. On Tuesday, the federal cabinet also approved the infusion of Rs 4,557 crore, or about $630 million in the IDBI Bank.
“It will help in completing the process of IDBI Bank’s turnaround and enable it to return to profitability and normal lending, and giving Government the option of recovering its investment at an opportune time", said an official release after the cabinet meeting.
The Indian economy has remained sluggish, with GDP growth being the slowest in over six years in the face of a sharp deceleration in consumer demand and lukewarm investment.
The growth in industrial production also slipped to a four-month low of 2%, mainly due to the poor performance of the mining and manufacturing sectors, according to data released by the government on Friday, 30 August.
