Notwithstanding the 246 points decline in the BSE benchmark index, following a hike in capital gains tax, experts said this year’s budget is positive for investors and markets will continue to follow global cues in the future.
“Overall it is a positive budget given the political compulsions. However, the increase in short-term capital gains tax and no reduction in corporate tax are sentimentally negative for capital markets,” domestic brokerage firm Sharekhan Head Research Gaurav Dua said. Sensex dipped by 245.76 points on Friday’s trading session, after Finance Minister P Chidambaram proposed a hike in short-term capital gains tax from 10 per cent to 15 per cent.
Besides, no reduction in corporate tax rates and a loan waiver package worth Rs 60,000 crore announced for farmers also contributed to the plunge, market observers added.

“Budget is positive for companies in the auto, infrastructure and pharma space and would positively affect the corporate bottom-lines,” Sharekhan Senior Vice President Hemang Jani said.

However, analysts said that increased capital gains tax would deepen the market by cutting down on the speculative part of the trading, as a higher tax would impact mostly the traders and not the investors.

Biggest driver
Kotak Mahindra Bank Managing Director Uday Kotak said global cues would continue to be the biggest driver for the Indian markets. Domestic inflation and interest rate regime would be the second biggest driver, followed by growth trend of the Indian economy. “Market will stabilise and Budget would prove to be a non-event,” domestic investment banking major J M Financial’s Nimesh Kampani said.