Business News at 10:00 am on 25th July, 2024

Let’s begin with the major update, While the general mood around the Budget was upbeat, there was a sting in the tail for investors in the form of higher taxes on both short-term and long-term capital gains (STCG & LTCG). Experts said while one can understand the need to curtail retail enthusiasm in the future and options segment, which led to the increase in the securities transaction tax, increasing the STCG from 15% to 20% and LTCG from 10% to 12.5% is rather harsh. The good news is that the capital gains limit which will not attract any tax has been increased from Rs 1 lakh to Rs 1.25 lakh. But many have expressed dismay that these guidelines are coming into effect immediately.

Moving on, The first Budget of the Modi 3.0 regime bore the imprint of policy continuity, and balanced growth impulses with tenacious fiscal consolidation, even as it used the resultant limited means to address the concerns around social and economic equity. Finance minister Nirmala Sitharaman’s speech left no trace of an acknowledged intent for course correction, or a big shift away from a growth model driven by public capital expenditure that seems to have almost run its course. Hopes are still largely pinned on Corporate India taking the baton, sooner than later. Nonetheless, the Budget gave greater thrust to provide “opportunities” for the “small” among the economic actors. It rolled out a clutch of initiatives to boost job creation and skilling.

In other news, The government seems to have been inspired by “the Lord gives and the Lord takes away” in announcing measures having a direct impact on consumers. With a cut in customs duty on several items, mobile phones, precious metals gold, silver and platinum, chargers, cancer medicines, leather goods, critical minerals, among others, are set to be cheaper. However, a 1% tax collected at source (TCS) on goods valued above Rs 10 lakh will make products such as jewellery, cars, houses, etc, expensive, even though the government has not notified the list of products attracting this tax. And while smartphones may get cheaper, an increase in customs duty on telecom equipment will increase costs for telcos.

Meanwhile, The stars have truly aligned for India, be it for the economy, markets or cricket. Just as the Indian cricket team were crowned world T20 champions, India remains one of the fastest growing large economies of the world. Corporate profit to GDP is close to an all-time high and it’s been a dream run for equity markets. In this backdrop, the Union Budget FY25 provides the right ingredients for laying the foundation to help propel India to the next decade of growth aligning with the goal of “Viksit Bharat”. The Union Budget has walked the fine balance between productive expenditure and fiscal consolidation putting to use the additional Rs 1.23 trillion dividend that the government received from RBI this year.

Up next, In line with industry expectations, Budget 2024 has paved the way for adoption of energy storage solutions while promoting nuclear energy. Finance minister Nirmala Sitharaman announced the removal of import duties on 25 critical minerals and reduced the basic customs duty on two of these. This will provide a major fillip to processing and refining of such minerals and help secure their availability for sectors like nuclear energy, renewable energy, space, defence and telecommunications, she said. However, in view of sufficient domestic manufacturing capacity, the Budget has imposed a customs duty of 10% on solar glass and 5% on tinned copper interconnect to make cells or modules with effect from October 1.

Moving ahead, As anticipated by the market, Tuesday’s Union Budget hiked the securities transaction tax (STT) on futures and options (F&O). The move is to arrest the rising participation of retail investors in this market, which the Economic Survey dubbed as ‘gambling.’ The segment’s fervor can be seen with the monthly turnover in the F&O segment reaching Rs 388.6 trillion in June 2024, compared to Rs 13.1 trillion in June 2019. Investors were also hit by a proposed levy of 20% short-term capital gains tax on financial assets held for less than 12 months, up from 15% earlier. The government has also proposed an increase in the long-term capital gains to 12.5% from 10% on all financial and non-financial assets.

Lately, let’s take a look at the key stocks for today. GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a negative opening on Wednesday. GIFT Nifty traded down by 34.50 points or 0.14% at 24,426.50 indicating a negative opening for domestic indices NSE Nifty 50 and BSE Sensex on Wednesday. Previously, on Tuesday, the NSE Nifty 50 ended down by 30.20 points or 0.12% to settle at 24,479.05 while the BSE Sensex fell 73.04 points or 0.09% to 80,429.04. Here’s a look at the key stocks to watch in trade – HUL, Bajaj Finance, Torrent Pharma, United Spirits, Vedanta, Titagarh Rail, Larsen & Toubro, Axis Bank.