Budget 2024 Impact: Key reasons behind the over 1500 points drop in Sensex from day's high
Indian benchmark indices- BSE Sensex and Nifty50- crashed sharply in a knee jerk reaction after Union Finance Minister Nirmala Sitharaman tabled the first budget for the Modi 3.0 government.
- Jul 23, 2024,
- Updated Jul 23, 2024 1:38 PM IST
Indian benchmark indices- BSE Sensex and Nifty50- crashed sharply in a knee jerk reaction after Union Finance Minister Nirmala Sitharaman tabled the first budget for the Modi 3.0 government. Prima facie, the steep selling pressure at Dalal Street indicated that the market participants gave its thumbs down. Selling pressure in recent multibagger sectors like defence, railway and PSU counters crashed sharply as no major announcement was made for these sectors during the budget. Hindustan Aeronautics, RNVL, Ircon, IRFC, Raitel, BEL, Bharat Dynamics, Uco Bank, Indian Overseas Bank and more tanked up 6% per cent on Tuesday.
Governments wants a bigger share in the current bull run pie, said the market participants. The market regulators like RBI, Sebi have recently expressed their discomfort with the household savings money moving in to mutual funds or speculative assets like derivatives, said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities.
"FM’s action clearly indicates that the government wants a bigger share in the pie that the investors have been enjoying. With this move it has aimed to raise some revenue for itself and moderately deflate the bubble in stock market. We believe that this will have a sentimentally negative impact on the markets for the short to medium term," he said.
The 2024 budget presents a mix of expected and surprising measures, asid Santosh Meena, Head of Research, Swastika Investmart. "While capital expenditure and the fiscal deficit target remain steady, significant changes to tax policies, particularly the increases in LTCG, STCG, and STT, are likely to impact market sentiment," he said.
The recent changes in the union budget, particularly the increase in STCG and LTCG tax signal a significant shift. While the market's initial reaction may seem bearish, we believe these changes will ultimately foster a more stable and mature investment environment, said Vaibhav Porwal, Co-founder, Dezerv on the rise in capital gains tax.
"The widening gap between STCG and LTCG rates is a clear incentive for longer-term holdings, which aligns with our view of creating sustainable wealth. This move is also a step towards standardising taxation across various asset classes, potentially simplifying the investment decision-making process for many," he said.
The 2024 Budget has increased the short-term capital gains and the long-term capital gains (LTCG) tax. This has caused some market instability as investors react to the higher taxes, said Kirang gandhi, a Personal Financial Mentor.
While the goal is to raise more revenue, these changes might discourage short-term trading and make long-term investments more attractive, potentially changing how the market behaves in the coming months," he adds.
Indian benchmark indices- BSE Sensex and Nifty50- crashed sharply in a knee jerk reaction after Union Finance Minister Nirmala Sitharaman tabled the first budget for the Modi 3.0 government. Prima facie, the steep selling pressure at Dalal Street indicated that the market participants gave its thumbs down. Selling pressure in recent multibagger sectors like defence, railway and PSU counters crashed sharply as no major announcement was made for these sectors during the budget. Hindustan Aeronautics, RNVL, Ircon, IRFC, Raitel, BEL, Bharat Dynamics, Uco Bank, Indian Overseas Bank and more tanked up 6% per cent on Tuesday.
Governments wants a bigger share in the current bull run pie, said the market participants. The market regulators like RBI, Sebi have recently expressed their discomfort with the household savings money moving in to mutual funds or speculative assets like derivatives, said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities.
"FM’s action clearly indicates that the government wants a bigger share in the pie that the investors have been enjoying. With this move it has aimed to raise some revenue for itself and moderately deflate the bubble in stock market. We believe that this will have a sentimentally negative impact on the markets for the short to medium term," he said.
The 2024 budget presents a mix of expected and surprising measures, asid Santosh Meena, Head of Research, Swastika Investmart. "While capital expenditure and the fiscal deficit target remain steady, significant changes to tax policies, particularly the increases in LTCG, STCG, and STT, are likely to impact market sentiment," he said.
The recent changes in the union budget, particularly the increase in STCG and LTCG tax signal a significant shift. While the market's initial reaction may seem bearish, we believe these changes will ultimately foster a more stable and mature investment environment, said Vaibhav Porwal, Co-founder, Dezerv on the rise in capital gains tax.
"The widening gap between STCG and LTCG rates is a clear incentive for longer-term holdings, which aligns with our view of creating sustainable wealth. This move is also a step towards standardising taxation across various asset classes, potentially simplifying the investment decision-making process for many," he said.
The 2024 Budget has increased the short-term capital gains and the long-term capital gains (LTCG) tax. This has caused some market instability as investors react to the higher taxes, said Kirang gandhi, a Personal Financial Mentor.
While the goal is to raise more revenue, these changes might discourage short-term trading and make long-term investments more attractive, potentially changing how the market behaves in the coming months," he adds.