General Budget 20018-19 : Equities close lower on Budget day on volatility infused by LTCG tax

By Sarkaritel February 1, 2018 19:36

Mumbai, Feb 1  Wiping off initial gains, the key Indian equity indices closed trade on a lower note on Thursday as the re-introduction of long-term capital gains (LTCG) tax for investing in equities infused volatility in the market.

In his Budget speech, Finance Minister Arun Jaitley proposed to tax long-term capital gains on equities exceeding Rs 1 lakh at 10 per cent — which is expected to bring in Rs 20,000 crore.

On a closing basis, the wider Nifty50 of the National Stock Exchange (NSE) fell by 10.80 points or 0.10 per cent to 11,016.90 points.

On the BSE, the barometer 30-scrip Sensitive Index (Sensex) failed to hold the 36,000-mark and closed at 35,906.66 points — down 58.36 points or 0.16 per cent from its previous session’s close.

The BSE market breadth was bearish with 1,486 declines and 1,288 advances.

“Markets corrected marginally on Thursday after a volatile session on the back of the Union Budget,” Deepak Jasani, Head, Retail Research, HDFC Securities, told IANS.

“Announcement of re-introduction of long-term capital gains (LTCG) tax for investing in equities led to some downward volatility mid session; however the markets later recovered.”

In the broader markets, the S&P BSE mid-cap index closed lower by 0.54 per cent, while the small-cap index closed flat.

Provisional data with the exchanges showed that foreign institutional investors purchased scrips worth Rs 1,099.78 crore, while domestic institutional investors divested stocks worth Rs 358.50 crore.

Vinod Nair, Head of Research, Geojit Financial Services, said: “Market saw volatility after the announcement of 10 per cent LTCG and a breach in fiscal deficit target for FY19 to 3.5 per cent and 3.3 per cent respectively.”

“Spiking government 10 year bond yield to 7.5 per cent is also creating some cautiousness among investors. Better forecasts for tax collection, rural spend, GDP growth and job creation are the positives of this budget which is expected to retain the sentiment in the market,” Nair added.

The Indian rupee weakened by 44 paise to close at 64.02 against the US dollar from its previous close at 63.58.

Sectorwise, the S&P BSE consumer durables index plunged by 400.18 points, followed by oil and gas index by 209.13 points and healthcare index by 200.65 points.

On the other hand, the S&P BSE capital goods index edged higher by 318.88 points, auto index by 174.22 points and FMCG index by 68.21 points.

Major Sensex gainers on Thursday were: Mahindra and Mahindra, up 4.44 per cent at Rs 797.35; Larsen and Toubro, up 2.77 per cent at Rs 1,455.80; IndusInd Bank, up 2.44 per cent at Rs 1,797; Bajaj Auto, up 2.12 per cent at Rs 3,409.50; and Asian Paints, up 1.89 per cent at Rs 1,152.45.

Major Sensex losers were: ONGC, down 4.06 per cent at Rs 195.10; Sun Pharma, down 3.99 per cent at Rs 556.25; Dr Reddy’s Lab, down 3.07 per cent at Rs 2,156.95; State Bank of India, down 2.30 per cent at Rs 305.55; and ICICI Bank, down 2.04 per cent at Rs 345.75.

By Sarkaritel February 1, 2018 19:36