Markets slip nearly 1% , investors snub few Union Budget announcements
Sensex lost over 250 points during the intra-day tradeNifty trades below 11,900-level
Mumbai: Indian stock markets have slipped nearly 1% after the Union Budget presentation by finance minister Nirmala Sitharaman.
At 1:45 pm, the Sensex is at 39,634.16, down 273.90 points or 0.69% while the Nifty is at 11,849.40, down 97.35 points or 0.81%.
Sitharaman said that in view of rising income levels, those in the highest income brackets, need to contribute more to the Nation’s development. “I, therefore, propose to enhance surcharge on individuals having taxable income from ₹2 crore to ₹5 crore and ₹5 crore and above so that effective tax rates for these two categories will increase by around 3% and 7% respectively," Sitharaman said.
She also proposed to give relief in levy of Securities Transaction Tax (STT) by restricting it only to the difference between settlement and strike price in case of exercise of options.
VK Vijayakumar Chief Investment Strategist at Geojit Financial Services said the highlight of the budget is the higher tax on the super rich.
"It has to be acknowledged that the tax incidence rising to 42% on the super rich is very sharp. The fiscal deficit target of 3.3% is unlikely to be achieved. The disinvestment target of ₹1.05 lakh crore is achievable and has to be strongly pursued. The crash in bond yields to around 6.66% is the direct consequence of the proposal to think about raising sovereign debt from abroad," Vijayakumar further added. According to him proposal to raise public stake in listed companies is desirable but will face practical constraints in implementation in the case of some large-cap companies.
Yogesh Chande, Partner, Shardul Amarchand Mangaldas & Co said that it will potentially be a concern of several listed companies with promoter shareholding at around 75% e.g. MNCs. “Promoters of such companies may want to explore options to delist such companies, unless they are fine with increasing the public shareholding by another 10%. At 65% promoter shareholding, it will also be an additional hurdle to be crossed by a promoter, if a promoter was to attempt delisting i.e. reaching 90% through the book building route from 65%, than from 75%," he said.
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