Finance Minister Arun Jaitley’s Budget has received thumbs up from the stock markets as it not only left long-Term Capital Gains (lTCG) on equities untouched but also focused on fiscal discipline and clarity on Foreign Portfolio Investment (FPI) taxation, exciting the bulls. As a result, the Sensex jumped 486 points to close at an over three-month high of 28,142, while the Nifty rallied by 155.10 points to settle at 8,716.40 on the back of banking, finance and realty stocks.
Jaitley has offered a range of incentives for the banking and finance sector, Income Tax, small housing and small and medium businesses towards boosting infrastructure and developing the rural economy.
Experts said the markets welcomed the budgetary proposals of infusing Rs10,000 crore in public sector banks and keeping lTCG and Short-Term Capital Gains tax (STCG) unchanged for the capital market. Union Bank of India soared 5.64 per cent, Bank of Baroda jumped 4.88 per cent, State Bank of India gained 3.96 per cent and Punjab National Bank went up by 3.24 per cent on the Bombay Stock Exchange. Shares of Bank of India gained 2.80 per cent, Allahabad Bank (2.78 per cent) and Syndicate Bank (1.79 per cent) while shares of DlF zoomed 7.81 per cent, Godrej Properties surged 5.43 per cent, Housing Development and Infrastructure limited jumped 5.2 per cent, Oberoi Realty (4.48 per cent) and Prestige Estates Projects (4 per cent) on the BSE.
Jaitley also proposed that category I and II FPIs should be exempted from taxation on indirect transfers, which made investors a happy lot.
Observing that the market speculation around lTCG, corporate tax rate cut across various forums was not mentioned in any form in the Budget, Systematix Shares & Stocks MD Nikhil Khandelwal said the Budget had more ‘ears on the ground’ than ‘ears on the market expectations’.
Kotak Securities senior vice-president (PCG Research) Dipen Shah lauded the absence of any changes in capital gains tax, adding apprehensions related to it have been erased.
“Focus on markets will now shift to global factors and the remaining quarterly results,” he added.
Major gainers included Maruti Suzuki (4.69 per cent), M&M (4.64 per cent), ITC (4.51 per cent), ICICI Bank (4.40 per cent), GAIl (3.76 per cent) and Adani Ports (3.60 per cent). The mid-cap index rose 1.77 per cent and small-cap 1.68 per cent.
Foreign investors sold shares worth a net Rs532.88 crore on Tuesday, as per provisional numbers.
Asian shares ended mixed with upward bias while European markets were trading higher in their afternoon deals.