Long-term capital gains tax woes dent investor sentiment
The Sensex and Nifty were trading flat due to fears over long-term capital gains tax following media reports that a 7-member panel has made recommendations to Prime Minister Narendra Modi to this effect.
At 12.10 p.m., the 30-share BSE index Sensex was up 36.01 points or 0.1 per cent at 34,469.08 and the 50-share NSE index Nifty was up 3.45 points or 0.03 per cent at 10,635.65.
Among BSE sectoral indices, realty index gained the most by 1.5 per cent, followed by IT 0.64 per cent, TECk 0.56 per cent and healthcare 0.55 per cent. On the other hand, oil & gas index fell 0.35 per cent, capital goods 0.18 per cent, metal 0.14 per cent and PSU 0.06 per cent.
Top five Sensex gainers were Kotak Bank (+1.4%), Infosys (+1.29%), Bharti Airtel (+1.19%), Tata Motors (+0.86%) and Sun Pharma (+0.86%), while the major losers were Axis Bank (-1.22%), Coal India (-1.1%), ICICI Bank (-0.98%), L&T (-0.65%) and Wipro (-0.6%).
Tax on long-term capital gains (LTCG), the impost that is the most fiercely opposed by India’s stock market participants, may finally be taken up by the government in Budget 2018. The Finance Ministry is looking to do away with the distinction between tax on long- and short-term capital gains or raise the holding period for long-term tax exemption to three years from one.
Talks of long-term capital gains tax (LTCG) has equity markets worried, but sentiments may not be impacted purely due to its imposition. A key reason for LTCG not adversely affecting markets is that it may not be a retrospective tax.
Asian shares
The New Year rally in Asian shares ran out of steam on Thursday as concerns about the US administration's protectionist stance hit Wall Street while US bonds were dented by speculation China may curtail buying. MSCI's broadest index of Asia–Pacific shares outside Japan shed 0.1 per cent in early trade, slipping further from Tuesday's 10-year peak. Japan's Nikkei lost 0.6 per cent.
US shares snapped their New Year rally on Wednesday while the Canadian dollar and the Mexican peso fell after a Reuters report said Canada increasingly believes that US President Donald Trump will soon announce his intention to withdraw from the North American Free Trade Agreement treaty.
The Dow Jones Industrial Average fell 16.67 points, or 0.07 per cent, to 25,369.13, the S&P 500 lost 3.06 points, or 0.11 per cent, to 2,748.23 and the Nasdaq Composite dropped 10.01 points, or 0.14 per cent, to 7,153.57.
(With inputs from Reuters)