Budget 2024: Stocks Tumble, Rupee At Record Low After Government Raises Capital Gains Tax

India's benchmark stock indices plunged on Tuesday after Finance Minister Nirmala Sitharaman increased the tax on short-term gains on some financial assets in the Budget 2024, the first since the formation of the coalition government.

At 12:28 p.m., the NSE Nifty 50 fell 308 points, or 1.3%, to trade at 24,180, and the S&P BSE Sensex declined 980 points, or 1.26%, to trade at 79,450.

During the session, the Nifty 50 companies' lost more than Rs 3.2 crore in investor wealth.

The government has proposed that capital gains taxation will be simplified, adding that short-term gains on some financial assets will now attract a 20% tax.

At the same time, the government raised the limit on the exemption of capital gains on some financial assets to Rs 1.25 lakh per year. Listed financial assets held for more than a year will be classified as long-term, Sitharaman said while presenting the Union Budget 2024.

The government has also proposed to abolish angel tax for all classes of investors and reduce the corporate tax rate on foreign companies to 35% from the current 40%.

The Indian rupee depreciated 2 paise to hit a fresh record low of Rs 83.68 against the US dollar after opening at Rs 83.64 on Tuesday. The yield on the 10-year government bond was trading flat at 6.79%.

The stock volatility gauge, India VIX, rose over 2% to 15.88 during the session.

Nifty FMCG was the only sector that was in the green on Tuesday, while Nifty Oil and Gas and Nifty Metal fell 4% each.

India’s equity gauge—the NSE Nifty 50—iis eyeing the key psychological barrier of 25,000, having hit fresh life highs over 40 times so far this year. The 30-stock S&P BSE Sensex has surged about 12% this year, making it the sixth-best index among its Asian peers.