The 30-share index on the Bombay Stock Exchange recovered from steep intra-day lows and ended the day at 17,579 a fall of 245.76 points, or 1.38 per cent, from its last close. The National Stock Exchange’s S&P CNX Nifty also fell by 61.60 points or 1.17 per cent to close at 5,223.50 from previous close of 5,285.10.

“Markets are obviously not happy with the capital gains tax,” said A Balasubramaniam, Chief Investment Officer at Birla Sun Life Asset Management Co, adding that as lots of sops have been given to farmers, investors will want to see how he’s going to make up for it in terms of collections.

Investor sentiments
Marketmen said while the proposed hike in levy on securities held for less than a year poured water on investor sentiments, some other encouraging proposals for sectors like auto, infrastructure, pharma and agriculture was welcomed with cheers.

However, the markets took the proposal to keep corporate and surchagres unchanged with a pinch of salt.
Hemang Jani, Senior Vice President, Sharekhan Ltd said people had low expectations going into this budget. “From stock market perspective, it is an average budget and in-line with last year’s budget except that this year FM has tried to fill-in lots of ‘populist goodies’ in the proposals.”

At the opening the Sensex had opened much lower and went down almost 500 points because of the increase in capital gain tax. But towards the end of the day operators realised that a part of the substantial gains made by the income tax payers, as the FM raised the exemption limit and also raised tax slabs, may get invested in the capital market in the future. The market was also relieved when the FM explained that banks will be reimbursed fully for the tax write off to farmers.