Indian benchmarks were little changed on July 24, with sentiment still sour a day after the government raised the tax on gains from equity investments.
The NSE Nifty 50 fell 0.09% to 24,456.6 as of 9:33 a.m. IST, while the S&P BSE Sensex shed 0.09% to 80,355.57. The broader, more domestically focussed small- and mid-caps were little changed.
“The Union Budget has presented short-term challenges for the markets,” said Pranav Haridasan, managing director and chief executive at Axis Securities. “The rise in capital gains tax rates and the increased tax on derivatives trading are a short-term negative.”
The blue-chips slipped 1.6% on July 23 after the government hiked the tax rate on equity derivatives trades and on profit from equity investments. A jump in consumer stocks helped the indexes recover to end with relatively lower losses. Eight of the 13 major sectors logged losses on the day.
Among individual stocks, cigarette maker ITC gained 3%, adding to their 5.5% jump on July 23 after the government did not raise tobacco taxes. Jeweller Titan rose 2%, adding to its 6.5% jump on the day after the government chopped the customs duty on gold and silver to 6% from 15%.
“We believe the reduction in customs duty is positive for consumer demand. Titan remains the clear market leader and a reduction in customs duty should be a positive catalyst,” said Aditya Soman and Vatsal Dujari, analysts at CLSA.
ITC and Titan were the top Nifty 50 gainers.
Hindustan Unilever lost 2.5% after the consumer good maker’s first-quarter results showed a “slight pick-up, but still a long road ahead”, according to Ambit Capital. Analysts also flagged the stock’s high valuation.