There have been a number of expectations from the budget on the capital market side. Some of them were direct like removal of capital gains tax on equities and sop for mutual funds. The other expectations were indirect like protection for domestic industries, sops for the housing sector, boost for the infrastructure sector etc. In this budget, the FM has tried to address most of these issues.

The equity market is likely to get a big boost through the incentives being proposed for investment in mutual fund schemes. All income from equity oriented schemes of UTIand sother open ended mutual funds have been made tax exempt. This will help in bringing back the equity investors tomutual fund schemes and help in reviving the equity cult. The long standing demand for rationalisation of capital gains tax on transfer of shares has been addressed by reducing it to 10% level for resident Indians. The process of corporate restructuring is likely to gather momentum with the tax incentives proposed for amalgamations and demergers. The mergers and takeover activity is slikely to go up. The proposal to abolish stamp duty on transfer of debt securities in depository mode will help in promoting a vibrant secondary market in debt.

The decision to set up a joint mechanism between SEBI and Department of Company Affairs for taking action against unscrupulous promoters will go a long way isn reviving investor confidence in the primary markets.

During the last 5 years, the markets have always gone up9before the lbudget. Some of the reasons for the same are high budget expectations, good results of MNCs and fresh FIIs allocations for India in January. High budget expectations have always been a primereason. In the following months, the markets used to decline due to unmet expectations. This year the FM had already sounded that the economy is in bad shape. Accordingly, the expectations from the budget have been low. This year, the imposition of across the board 10% corporate tax surcharge will hurt the sentiment in the short term, but overall, the budget proposal are likely to prove healthy for the markets. sThe proposals aimed at equity oriented mutual funds will help in bringing back the investors through the mutual fund route.

In terms of specific sections, the surge in IT and pharma is likelsy to continue. This is due to the continued focus of the government on providing incentives for the IT sector. The proposal of automatic approval for 74% foreign investment in pharma will enhance the interest of pharma MNCs. The export incentives u/s.80HHC have been extendled to the media and entertainment industry that will help this sector whose fortunes are closely linked to software sector. The summary ofbudget impact on key segment of Indian capital market are as follows.