Stock markets edge down on STT, LTCG hike

Benchmark Sensex and Nifty settled marginally lower in volatile trade on Tuesday as the government proposed to hike securities transaction tax on futures & options in the budget for 2024-25.

Recovering most of its intra-day losses of over 1,200 points, the 30-share BSE Sensex settled lower by 73.04 points or 0.09 per cent 80,429.04.

The index gyrated between highs and lows during the day as Finance Minister Nirmala Sitharaman announced Budget proposals for 2024-25.

The barometer tanked 1,277.76 points or 1.58 per cent to hit a low of 79,224.32 as the minister announced a hike in STT on F&O trade and an increase in long-term capital gains tax on equities.

However, tax exemptions and customs duty cuts helped boost consumer durables and FMCG shares, aiding stocks to recover from the day's lows.

The NSE Nifty dipped 30.20 points or 0.12 per cent to 24,479.05. Intra-day, it dropped 435.05 points or 1.77 per cent to 24,074.20.

Among the Sensex pack, Titan jumped over 6 per cent, followed by ITC which surged more than 5 per cent.

Adani Ports, NTPC, Infosys, Hindustan Unilever, HCL Technologies and Sun Pharma were among the other big gainers.

However, Larsen & Toubro, Bajaj Finance, State Bank of India, Axis Bank and HDFC Bank were amonh the major laggards.

"From the markets perspective the raising of STCG (Short-Term Capital Gains Tax) to 20% and LTCG (Long Term Capital Gains Tax) to 12.5% is a body blow.

“We need to brace ourselves for a negative reaction in the short term," Sanjay Sinha, Founder, Citrus Advisors, said.

Finance Minister Nirmala Sitharaman on Tuesday announced income tax relief for the middle class, a Rs 2 lakh crore outlay for job creation schemes over the next five years and a spending splurge for states run by her party's new coalition partners as she unveiled Modi 3.0 government's first budget after the general elections.

With rural distress and unemployment being blamed for BJP losing its majority, Sitharaman in her seventh straight budget provided Rs 2.66 lakh crore for rural development and maintained spending on long-term infrastructure projects at Rs 11.11 lakh crore to boost economic growth.

The finance minister said the government plans to raise the capital gains exemption limit on certain financial assets to Rs 1.25 lakh per year for the middle and upper middle class.

Presenting the Budget for 2024-25, she announced a hike in STT (Securities Transaction Tax) on F&O (futures and options) securities by 0.02 per cent and 0.1 per cent.

She abolished 'angel tax' for all classes of investors in startups, cut customs duty on mobile phones and gold and simplified capital gains tax.

Foreign Institutional Investors (FIIs) bought equities worth Rs 3,444.06 crore on Monday, according to exchange data.

In Asian markets, Seoul settled higher while Tokyo, Shanghai and Hong Kong ended lower.

Global oil benchmark Brent crude climbed 0.25 per cent to 82.63 a barrel.

Union Budget 2024: Complete Coverage