Budget proposal on capital gains tax pulls Sensex down 58 points

The S&P BSE Sensex ended down by over 58 points in a highly volatile trade as markets gave a thumbs down to the Budget proposals like long-term capital gains tax on equities.

However, the grandfathering provision of taxing long-term capital gains tax with January 31, 2018 being a cut-off date has somewhat come as a relief to investors.

Domestic sentiment was also hit after the fiscal deficit target for 2017-18 was raised to 3.5 per cent of GDP as against 3.2 per cent earlier.

After opening on a positive note at 36,048.99, the Sensex rose to 36,256.83 points during the presentation of the Budget but turned negative after Arun Jaitley announced long-term capital gains tax, hitting a low of 35,501.74.

However, it bounced back to close at 35,906.66, still down 58.36 points, or 0.16 per cent. Nifty too saw volatility and ended at 11,016.90, down 10.80 points, or 0.10 per cent. It hovered between 11,117.35 and 10,878.80 during the day.

Fiscal deficit: The fiscal deficit will overshoot to 3.5 per cent from the earlier estimate of 3.2 per cent in the current fiscal, ending March 31, said the Finance Minister Arun Jaitley.  Read more

 

Closing bell: The S&P BSE Sensex ended lower by 58.36 points or 0.16 per cent at 35,906.66 and the Nifty closed down by 10.8 points or 0.1 per cent at 11,016.90.

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Prime Minister Narendra Modi, has termed the Union Budget for 2018-19 “development-friendly” and said it will strengthen the vision of a ‘new India’. Click here to read the full story

 

The grandfathering provision of taxing long-term capital gains tax with January 31, 2018 being a cut-off date has come as a relief for the equity market. Click here to read more

 

 

 

In a major bonanza to farmers, Finance Minister Arun Jaitley has announced fixing support price of Kharif crops like paddy at least 50 per cent higher than the cost of production, while raising farm credit target for the next fiscal by 10 per cent to ₹11 lakh crore.

 

Brokers' reaction on long-term capital gains tax

“Rationalisation of LTCG as expected has arrived, though negative on sentiments but robust equity returns will absorb this 10 per cent if corporate earnings growth happen as expected,” said Kamlesh Rao, MD and CEO, Kotak Securities.

”... introduction of LTCG may disappoint equity markets to some extent. Reduction in corporate tax rates for MSME companies will bring them back on growth track,” said Anita Gandhi, Whole Time Director at Arihant Capital Markets Ltd.

“The much anticipated introduction of LTCG is now back with a new avatar. As we know in tax legislation, this could only get worse over a period of time with every successive budget diluting the original commitment of taxing long term gains,” said Milind Kothari, Managing Partner, BDO India.

“The budget has proposed a long-term capital gain tax on profits over Rs 1 lakh from equity transactions made post 31st January, 2018 at 10 percent of total gains. However, any profit made till 31st January, 2018 is exempted from LTCG.

This move was expected. Introduction of LTCG will lead to the Sensex falling at least in short term,” said Monish Panda, Founder, Monish Panda and Associates.

 

 

 

Imposition of long-term capital gains tax had a mixed reaction among brokers. Some expressed disappointment over the introduction of long-term capital gains tax, saying the markets may react negatively in the short-term. However, some brokers said the move will be healthy for the overall economy.

The S&P BSE Sensex was trading higher by 211.98 points or 0.59 per cent at 36,177 and the Nifty50 was up 56.3 points or 0.51 per cent at 11,084.

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The Sensex recovered from the day's low of 35,502 and was trading up by 110.99 points or 0.31 per cent at 36,976.01 and the Nifty too rebounded from the low of 10,888.35 and was trading up by 31.5 points or 0.29 per cent at 11,059.2.

Domestic markets crashed as soon as Finance Minister Arun Jaitley announced long-term capital gains tax of 10 per cent on gains of over Rs 1 lakh.

Domestic sentiment also took a hit after the fiscal deficit target for 2017-18 was raised to 3.5 per cent of GDP as against 3.2 per cent earlier.

The benchmark BSE Sensex recovered from the intraday low of 35,501.74 but was still trading down by 136.12 points or 0.38 per cent at 35,828.90. Similarly, the Nifty recovered from the day's low of 10,888.35, but still down by 43.9 points or 0.4 per cent at 10,983.80.

Sensex gainers and losers

 

Budget provides relief in corporate tax for smaller companies.

 

Long-term capital gains exceeding Rs. 1 lakh to be taxed at the rate of 10%: Finance Minister

 

The Sensex slumped over 300 points and the Nifty declined 76 points as the Finance Minister, Arun Jaitley, announced measures on rationalising long-term capital gains tax. N ifty Midcap and Small cap indices were down 1.2-1.7 per cent.

 

Personal Income Tax rates unchanged; Rs. 40k standard deduction in lieu of present exemption: Jaitley

 

No change in personal income tax rates for salaried class.

 

Companies with turnover of upto Rs. 250 cr to be taxed at 25%.

 

80,000 crore disinvestment target for 2018-19; target for 2017-18 exceeded and will reach Rs 1 lakh crore.

 

Tax buoyancy more than expected, thanks to greater compliance: Jaitley.

 

5 lakh WiFi hotspots to be set up in rural areas to provide easy Internet access.

 

Markets slipped into the red as the Budget proposals announced so far failed to cheer investor sentiment. The Sensex was trading down by 73.89 points or 0.21 per cent at 35,891.13 and the Nifty down 11.95 points or 0.11 per cent at 11,015.75.

 

Government insurance companies to be merged into a single entity, and subsequently listed in the stock exchange, as part of the disinvestment programme .

 

₹1,48,528 crore - capital expenditure for Indian Railways.

 

Markets slightly loses strength: The Sensex was trading up by 139.25 points or 0.39 per cent at 36,104.27 after hitting intraday high of 36,226.97. Similarly, the Nifty was up 34.75 points or 0.32 per cent at 11,062.45 after hitting a high of 11,102.05 earlier in the day .

BSE sectoral indices

NSE sectoral indices

 

National Health Protection Scheme to cover 10 crore poor and vulnerable families by providing upto Rs 5 lakh per family per year.

 

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Stocks of housing finance companies like LIC Housing Finance, PNB Housing Finance, Dewan Housing, GIC Hosuing Finance and Can Fin Homes gained in the range of 1.8-2.4 per cent as the government proposed to set up a dedicated affordable housing fund.

 

The S&P BSE Sensex was up 176.24 points or 0.49 per cent at 36,141.26 and the Nifty50 up 64.15 points or 0.58 per cent at 11,091.85. Among BSE sectoral indices, capital goods index was the star-performer and was up 2.18 per cent, followed by realty 0.97 per cent, infrastructure 0.89 per cent and FMCG 0.82 per cent.

Top gainers on BSE

Top gainers on NSE

 

 

Government to double the allocation for food processing, specialized agro-processing and financial institutions to be promoted by Government.

 

Jaitley says MSP of crops to be increased to at least 1.5 times of the production cost.

 

The Sensex was trading up by 160.25 points or 0.45 per cent at 36,125.27 and the Nifty up by 43.55 points or 0.39 per cent at 11,071.25 as the Finance Minister, Arun Jaitley, started presenting the Union Budget 2018.

 

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Finance Minister arrives in Parliament to present the Union Budget. (Photo: Kamal Narang)

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The Sensex surged over 220 points ahead of the Union Budget to be presented by the Finance Minister, Arun Jaitley, at 11 am today. The Sensex was trading higher by 223.48 points or 0.62 per cent at 36,188.50 and the Nifty up by 55.5 points or 0.5 per cent at 11,083.20.

Among BSE sectoral indices,  capital goods index was the star-performer and was up 2.02 per cent, followed by consumer durables 1.2 per cent, realty 1.01 per cent and infrastructure 0.94 per cent.

 

Among NSE sectoral indices, realty index gained the most by 1.12 per cent, followed by IT 1.01 per cent, auto 0.56 per cent and private bank 0.53 per cent.

 

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Suven shares up 1.5% : Shares of Suven Life Sciences gained as much as 1.56 per cent on Thursday as the company has received a product patent from Aripo (AP4415) and one product patent from South Korea (10-18087922) corresponding to new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases.

Following a positive open at Rs 216.45 against the previous close of Rs 214.30, the stock touched an intraday high of Rs 217.65 and a low of Rs 212.50. At 9.40 am, the shares were trading up by 0.28 per cent at Rs 214.90 on the BSE.

 

The company said that these patents are valid through 2033 and 2034, respectively. These are being developed as therapeutic agents for major depressive disorders and are useful in the treatment of cognitive impairment associated with neurodegenerative disorders like Alzheimer’s disease, attention deficient hyperactivity disorder (ADHD), Huntington’s disease, narcolepsy, Parkinson’s and schizophrenia, respectively.

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At 9.15 am, the Sensex was up 160 points or 0.44 per cent at 36,125.02 and the Nifty was up 36.7 points or 0.33 per cent at 11,064.40.

The 30-share BSE index Sensex rose 31.55 points or 0.37 per cent to 36,096.72 and the 50-share NSE index Nifty gained 31.55 points or 0.29 per cent to 11,059.25.