New Delhi: The total market valuation of BSE-listed companies surged to an all-time high of over Rs114 trillion on Thursday on robust stock market sentiment amid the Union budget proposals, especially with regard to fiscal discipline and clarity on FPI (foreign portfolio investors) taxation.
The BSE market capitalization swelled to Rs1,14,27,774 crore on Thursday. “In the midst of grave global and domestic challenges, the finance minister has done a commendable job. Markets have rejoiced as the fears of extending long term capital gains tax tenure from 1 year to 2 years has not materialised," said Ajay Bodke, CEO & chief portfolio manager of Prabhudas Lilladher.
A focus on fiscal discipline and clarity on FPI taxation as reflected in the Union Budget came as music to investors’ ears, with the Sensex leaping nearly 486 points on Wednesday to close at an over 3-month high of 28,142. On Thursday, the benchmark index closed at 28,226.61 points, up 0.30% or 84.97 points.
Additionally, finance minister Arun Jaitley proposed that category I and II foreign portfolio investors (FPIs) should be exempted from taxation on indirect transfers, which made investors a happy lot. Among the 30-Sensex stocks, 18 ended with gains.
Notable gainers on Wednesday were Maruti Suzuki India Ltd, Mahindra and Mahindra Ltd, ITC Ltd and ICICI Bank Ltd. “For the markets, the fiscal deficit of 3.2% is positive as it means interest rates can be lower further during the next fiscal. Also, absence of any changes in capital gains tax is a positive as these apprehensions have been erased. Focus on markets will now shift to the global factors and the remaining quarterly results," said Dipen Shah, senior vice-president (PCG Research) at Kotak Securities.
Markets welcomed the budgetary proposals of infusing Rs10,000 crore in public sector banks and keeping long-term (LTCG) and short-term capital gains tax (STCG) unchanged for the capital market.
“Markets had apprehensions about possible changes in the equity-related tax regime. But, there was nothing to be concerned about in the budget. This can sustain a rally in the equities which would continue to be the most tax efficient investment option at present in the country," said Suhas Harinarayanan, head of institutional equities research at JM Financial Institutional Securities Ltd. On BSE, 1,913 stocks advanced, while 915 declined and 104 remained unchanged.