Benchmark Sensex and Nifty indices extended losses as investors digested the higher taxes on equity transactions. Sustained selling by foreign portfolio investors (FPIs) amid weak global cues also weighed on market performance.
Falling for a fourth day, the benchmark Sensex closed at 80,149, with a decline of 280 points, or 0.4 per cent. The Nifty fell 66 points, or 0.3 per cent, to end the session at 24,414. The Sensex and the Nifty hit intra-day lows of 79,751 and 24,307, respectively.
FPIs sold shares worth Rs 5,131 crore on Wednesday, while domestic institutions stepped up buying, infusing Rs 3,137 crore into the cash market.
The government has announced a steep increase in securities transaction tax (STT) in the derivatives segment to curb speculative trading activity. It has also raised the short-term and long-term capital gains taxes on equities.
“We remain cautious on the markets. A good budget is in the price and unlikely to move the needle significantly. On the other hand, we are looking at a tepid earnings season, as topline growth remains moderate and margin tailwinds are petering out. Also, rate cuts are at least 1-2 quarters away and valuations are stretched at 21.4x one-year forward P/E of Nifty, with no imminent upgrades,” said Seshadri Sen, head of research and strategist, Emkay Global Financial Services.
“Markets experienced some decline after investors’ mood soured following an unexpected increase in short-term and long-term capital gains taxes. We anticipate the market to quickly discount the budget and shift its focus to the trajectory of corporate earnings growth, which has remained marginally below our expectations so far in Q1FY25,” added Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services.
Other key highlights
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Around 1 in 3 individuals who trade in the equity cash segment, trades intraday. -
Intra-day traders (at top 10 brokers) rose to 6.9 mn in FY23 from 1.5 mn in FY19 -
Share of young intraday traders (age less than 30 years) has grown to 48% in FY23 as compared to 18% in FY19. -
Proportion of Female traders (by intraday traders count) declined to 16% in FY23 from 20% in FY19 -
Participation from Tier-1, Tier-2, Tier-3 cities (from sample) increased to 3x, 5x, 10x, respectively, in FY23 as compared to FY19.
First Published: Jul 24 2024 | 6:52 PM IST
