New Delhi: Even as the Indian equity indices continued its downslide on Monday, the government said it was not in reaction to the Union Budget announcement on February 1 where 10 per cent Long Term Capital Gains (LTCG) tax was reimposed.

Finance Minister Arun Jaitley on Monday attributed the downslide in the bourses to the negative global cues.

Jaitley’s remarks came after the Indian equity markets on Friday witnessed the steepest fall since November 2016, after LTCG tax on equities was re-introduced in the Union Budget for 2018-19, leading the Sensex to shed over 800 points and the Nifty50 over 200 points in a single day. “It is not due to the Budget or the LTCG. Dow Jones has also fallen by over two per cent,” Jaitley told reporters on the sidelines of an event here.

Talking on the similar vein, Finance and Revenue Secretary Hasmukh Adhia on Monday said equity investments still remain attractive as only a 10 per cent LTCG tax has been imposed on it.

Adhia, who addressed a CII event here on Monday, said that in comparison to other asset classes the LTCG tax is lower on equities and the government has decided to “grandfather” gains made until Jan.31, 2018.

On Feb.1, Finance Minister Arun Jaitley proposed to tax LTCG on equities exceeding Rs 1 lakh at 10 per cent, which is expected to bring in revenue of Rs 20,000 crore.

According to market observers, disappointing announcements in the Budget like the reintroduction of the LTCG tax and a higher-than-expected fiscal deficit target for 2018-19 continued to dampen investors’ risk-taking appetite.

Weak global cues, along with heavy selling pressure in banking, capital goods, consumer durables and finance stocks, pulled the key Indian equity indices lower during the mid-afternoon trade session on Monday.

According to market observers, disappointing announcements in the Budget like the reintroduction of the long-term capital gains (LTCG) tax and a higher-than-expected fiscal deficit target for 2018-19 continued to dampen investors’ risk-taking appetite.

Around 1.21 pm, the wider Nifty50 of the National Stock Exchange fell by 96.50 points or 0.90 per cent to trade at 10,664.10 points.

Sensex Down

On the BSE, the barometer 30-scrip Sensitive Index (Sensex), which opened at 34,718.85 points, traded at 34,767.38 points − down 299.37 points or 0.85 per cent from Friday’s close.

Around 12.30 pm, the wider Nifty50 of the National Stock Exchange fell by 81.75 points or 0.76 per cent to trade at 10,678.85 points.

On the BSE, the barometer 30-scrip Sensitive Index (Sensex), which opened at 34,718.85 points, traded at 34,794.66 points − down 272.09 points or 0.78 per cent from Friday’s close.

The BSE market breadth was bearish as 1,776 stocks declined as against 854 advances.

“Indian shares opened lower on Monday, after falling most in 14 months in the last trading session, on profit taking across sections,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“Investors booked profits on concerns over LTCG tax and widened fiscal deficit target amid weak cues from the Wall Street and Asian stocks, after an upbeat jobs report sparked fears of a sharper hike in interest rates in the US,” he added.

Last Friday, the equity indices fell the steepest since November 2016 due to a huge sell-off in the markets.

The Sensex plunged by 839.91 points or 2.34 per cent to close at 35,066.75 points, while the Nifty50 dropped 256.30 points or 2.33 per cent to 10,760.60 points.

Arun Jaitley also said that said the government cannot act like a commercial entity even when it comes to the “commercial activities of the State”, and cannot just “pick and choose” in matters of public procurement.

Indo-Asian News Service