The stock markets did not find any immediate cause for cheer in finance minister Nirmala Sitharaman’s budget announcement. In fact, the markets that have been reeling under the burden of various taxes and compliance cost were saddled with more on Friday. The Sensex and the Nifty, the key indices, closed the day with a fall of 1 per cent and 1.14 per cent, respectively. During intra-day trading, the fall in the indices was sharper.

The markets were looking for a booster shot to revive consumer spending, which is only possible if the government cut taxes and left some money in the hands of people. Compounding the woes, the budget has imposed a 20 per cent tax on buyback of shares and has increased the cess on petrol and diesel. Then there was the super rich tax which market players say makes the government looks like a Robin Hood but in actual terms slams the brakes on spending. The budget has also proposed that public shareholding in listed companies be brought to 35 per cent, which could put additional supply pressure on the markets.

A 90s-like scenario

Belying expectations, the securities transaction tax was not rationalised even on cash market transactions where it is felt that the rate is disproportionate compared to transactions in the derivatives segment. The Sensex and Nifty may be near their all-time high levels but a large number of small and mid-cap stocks and even many key index stocks suggest a 90s like dull market scenario. Among Sensex and Nifty stocks, leaving around 15 stocks, most are down by around 30 per cent from their highs.

“Economic theory says that more money in the hands of people could boost economy and thereby taxes. But the markets have realised that government lacks such a belief as of now, and hence, the nervousness,” said Rohit Srivastava, fund manager, Sharekhan-BNP Paribas.

“The budget has been good in addressing many long- term aspects including government borrowing, but there is no immediate stimulus,” said Mehraboon Irani, equity analyst.

“The government cannot afford to ignore capital market as it plays an important role in jobs creation, consumption and fund raising. Hope that several issues will be addressed by government action outside budget,” Irani added.

Srivastava said that though he has seen markets rise ahead of budget and fall on the day of announcement, this time, the sentiment seemed to be at its nadir.