D-St blues! Sensex loses 1.5K, biggest fall on Budget Day – The Times of India

At a time when global markets are witnessing high volatility due to geopolitical uncertainties, the increase in securities transaction tax (STT) on derivatives trading has adversely affected investor sentiment on Dalal Street on Budget Day. This in turn led to a sharp sell-off, causing the sensex to fall by almost 1,500 points (the biggest point loss on Budget Day) to close at 80,773 points. The sell-off also left investors poorer by Rs 9.4 lakh crore, the biggest Budget Day loss in BSE’s market cap.The day’s trading was characterized by high volatility. The sensex rose over 400 points when FM started its talk, fell around 1,100 points after the STT hike proposal was announced, partially recovered mid-session to trade 600 points lower on the day and then sold off to close below 81,000 for the first time in four months.On the NSE, Nifty also followed a similar path and closed 495 points (2%) lower at 24,825 points. Fund managers and market players believe the day’s sell-off was exaggerated, compounded by the absence of most institutional players since it was a Sunday. “The market reaction (to the STT rate hike) was a bit overdone, although the decision itself was unexpected,” said Taher Badshah, President & Chief Investment Officer of Invesco Mutual Fund. “I think the markets should settle down in two to three days.” Badshah said the budget was in line with the path set by the government in recent years and showed a conservative approach in setting targets.“The revenue and expenditure targets for FY27 are achievable. And since inflation is lower now, nominal GDP growth of 10% may prove to be on the higher side as inflation normalizes over the year,” the top fund manager said. In Sunday’s market, of the 30 Sensex stocks, 26 closed in the red. Among the index constituents, Reliance Industries, SBI and ICICI Bank contributed the most to the day’s loss. Purchasing the major software services Infosys and TCS has absorbed the decline. A total of 2,444 stocks closed in the red, compared to 1,699 that closed in the green, BSE data showed.STT increase aimed at curbing F&O speculation The decision to increase the securities transaction tax (STT) on equity derivatives trading means that futures and options (F&O) trading will become more expensive from April 1. The STT for futures trading will now increase from 0.02% to 0.05%, and for option premiums and option exercises from 0.1% and 0.125% to 0.15% respectively. This could more than double the regulatory costs of trading F&O contracts.Although this measure is intended to curb excessive speculation by retailers, who mainly suffer losses, investors sold shares of companies that generate a large part of their turnover from this segment. Angel One’s share price crashed almost 9%, BSE crashed 8.1%, Billionbrains Garage Ventures, which runs trading platform Groww, lost 5.1% and Nuvama Wealth Management lost 7.3%. The STT hike follows a Sebi survey that found that 91% of retail investors lost money in the F&O market, with the average loss per investor exceeding Rs 1 lakh per year. Institutional and some wealthy players took home most of the profits from the segment.Removed 18% GST on brokerage for FPIsThe Budget proposed to abolish the 18% VAT charged on brokerage fees paid by foreign portfolio investors in India. Among the many amendments to the GST laws proposed by the Finance Minister, one was the abolition of clause (b) of sub-section (8) of Section 13 of the Integrated Goods and Services Tax Act, 2017. This is “omitted to provide that the place of supply for ‘intermediary services’ shall be determined as per the default provision under Section 13(2) of the IGST Act,” the Budget proposal said.