Budget impact: Sensex falls 700 points, INR hits record low
What's the story
Indian equity benchmarks fell sharply today after Finance Minister Nirmala Sitharaman concluded her Budget 2024 speech. The domestic benchmarks were dragged by banks, financials, metal and energy stocks. At 1:20pm, Sensex tanked over 700 points while the Nifty 50 dropped to below 24,300 mark. Defence stocks declined after Sitharaman announced sector outlay at ₹4.56 lakh crore versus ₹4.55 lakh crore in Interim Budget.
INR plummets
Indian Rupee declines to record low
Indian Rupee (INR) fell to a record low against the US Dollar (USD) on Tuesday, pressured by the decline in local equities after the government proposed raising the tax rate on capital gains. INR declined to 83.69 versus USD, inching past the previous lifetime low of 83.6775, and compared with 83.6275 before the budget announcement.
Gainers and losers
ITC surges 5% on no change in tobacco taxes
Looking at the sectoroal gainers and losers, Nifty Bank, Nifty Financial Services, and Nifty Metal fell by up to 1.6%. Capital goods stocks plunged up to 8% as Sitharaman announced no change in capex for FY25 in comparison to FY24. Nifty FMCG gained 2.4% whiel Nifty Realty was up 0.26%. ITC shares surged up to 5% on no change in tobacco taxes.
Tax increase
STCG and LTCG tax increases affect market moood
Sitharaman on Tuesday said that Long-term capital gains (LTCG) on all financial and non-financial assets will now be taxed at 12.5%, up from the current 10%. Short-term capital gains (STCG) on specified financial assets will now attract a tax rate of 20% instead of 15%. Security Transactions Tax on futures and options of securities has been increased to 0.02% and 0.1% respectively.