Benchmark indices ended marginally lower after gyrating wildly as the government raised the capital gains tax and the securities transaction tax on futures and options.
The Sensex tanked over 1,200 points intraday before recovering to close at 73 points at 80,429. The Nifty dipped 0.12 per cent to 24,479.
The volatility index declined sharply by 17 per cent to 12.75 per cent levels. Buying was seen in the Consumer Durable, FMCG and Pharma sectors after the government proposed incentives and policies to boost these sectors. The FMCG index gained 3 per cent, while the Realty index fell the most, falling 2.4 per cent. ITC shares rose over 6.5 per cent as the Budget maintained status quo on tobacco taxation. Titan saw positive movement, driven by optimism following the government’s proposal to reduce customs duty on gold.
“The overarching theme of this Budget is fiscal consolidation and focus on employment generation. The reduction in fiscal deficit target for FY25 from 5.1 per cent in the interim Budget to 4.9 per cent now reflects the government’s focus on growth with financial stability. This, along with ₹11.11-lakh crore (3.4 per cent GDP) of capex in FY25, augurs well for the growth of the economy in the long run,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services..
More taxing
From the market perspective, the Budget proposals, with the intent of raising tax revenue from capital gains, are slightly negative, he said. The taxation of share buyback income at the hands of the recipients also is a negative, he added.
Navneet Munot, MD and CEO, HDFC AMC, said, “Spotlight on skilling and job creation could help India reap rewards of its demographic edge. While digesting the taxation changes, equity markets will shift focus back on earnings trajectory and other macro-economic developments. Continuing commitment to fiscal consolidation could bode well for the bond market.”