The government increased the securities transaction tax (STT) on futures and options contracts, along with other revisions in the Finance Bill 2023, causing the Indian shares to extend losses for the third week in a row amid volatility and widespread selling.
The Nifty 50 index fell 131.90 points, or 0.77 percent, to settle at 16,945.05, crossing the psychological threshold of 20,000. At 57,527.10, the S&P BSE Sensex dropped 398.18 points, or 0.69 percent. Both benchmarks experienced weekly losses of around 1%.
Media, Metal, Realty, and PSU Bank saw the most declines out of all the sectoral indices, which all finished in the red. IT remained solid the entire session, although it finished with slight losses.
With a loss of 3.81 percent, Bajaj Finserv led all Sensex component companies. Tata Steel, Reliance Industries, HCL Tech, SBI, Larsen & Toubro, Mahindra & Mahindra, Axis Bank, and Titan were the next biggest losers.
Kotak Mahindra Bank, Infosys, Tech Mahindra, Power Grid, Asian Paints, and Wipro, on the other side, saw growth. If debt mutual funds (MFs) invest less than 35% of their assets in stocks, they would now be subject to short-term capital gains tax under the revised Finance Bill.
From April 1, 2023, trading in futures and options will cost more due to a clause in the Finance Bill 2023 amendment that increases the Security Transaction Tax (STT) on the sale of options and futures. The Lok Sabha approved an amendment to the Finance Bill 2023 on Wednesday, informing the public that the STT for the sale of options has increased by 23.52 percent.
“Cues from both the global and domestic markets were subdued. The asset management industry was hit hard by tax changes and the elimination of the indexation benefit of debt mutual funds. The volatility was fuelled by weak European markets, which was driven by banking stocks as CDS spread increased. Although all major sectors traded in the red, selling in the IT sector was limited despite warnings of muted growth,” said Vinod Nair, Head of Research at Geojit Financial Services.
Bank Nifty dropped to 39,395 by 221 points, or 0.56%. On Friday, 41 of the Nifty 50’s components decreased.
“The Bank Nifty bears took over the control on the last day of the week and the index ended on a negative note. The index as long as does not surpass the level of 40000 remains ina sell on rise mode. The immediate support on the downside is at 39000 and a breach below this will lead to a sharp decline. The momentum indicator RSI trading in the bearish zone confirms the weakness in the index,” said Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities.
Meanwhile, the rupee declined 25 paise to close at 82.45 against the US dollar. Global oil benchmark Brent crude dipped 1.73 per cent to USD 74.60 per barrel.
Foreign Portfolio Investors offloaded equities worth ₹995.01 crore on Thursday after a day’s breather, according to exchange data.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of sharebaz. We advise investors to check with certified experts before taking any investment decisions.