InvestorQ : Is the correction after the budget now over for the Nifty?
manisha Kolvenkar made post

Is the correction after the budget now over for the Nifty?

Answer
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Mahima Roy answered.
1 year ago


That is quite hard to say because the market continues to be negative and has fallen on most of the days during the week. In fact, the Nifty is down nearly 500 points from the budget day. There are some budget announcements like the buyback tax of 20% and the proposal to increase the public shareholding to 35%, which have not gone down very well with the investors. The market is basically reacting to these factors. One more important factor is the issue of tax surcharge on foreign portfolio investors. The higher surcharge on incomes above Rs.2 crore and Rs.5 crore will hit FPIs that are structured as trusts or AOPs. Nearly 40% of the FPIs in India are structured as trusts or AOPs and they will be all hit by this higher surcharge on tax. This will continue to be an overhang on the markets.

There are also some global factors to consider. For example, the trade war is still on and that is not good news for Indian exports. Secondly, the tensions in the Middle East are likely to push oil prices higher and that would impact the trade deficit in the Indian context. So, it may be hard to say that the markets have bottomed out. The markets could be preparing for some more pain.