FM's clarification on capital gains tax
could see markets recover on Monday
Finance Minister Nirmala Sitharaman has denied the
reports that the Income Tax (I-T) Department is planning to introduce changes
in the capital gains tax structure in case the government is voted back to
power in the ongoing Lok Sabha 2024 polls.
Wonder where this is come from. Was not even double
checked with @FinMinIndia. Pure speculation," FM Sitharaman said on social
media X while reacting to a tweet made by a news channel claiming that the
I-T department is planning to impose uniform treatment for all asset classes.
Ambareesh Baliga, an independent market analyst
believes the markets want more of the same in terms of income tax-related
policies.
The government will not look to change the current
tax policies if it is voted back to power, and that s what the markets, too,
want policy continuity and a stable regime, he said.
The capital gains rumour mill worked over-time on
Friday, May 03, and sent the stock markets crashing with the S&P BSE Sensex
ending 733 points, or 0.98 per cent lower at 73,878 levels. The index hit an
intra-day high of 75,095.18 levels on May 03, slipped to a low of 73,467.73
levels during trading hours on Friday before recovering partially by close of
trade.
The Nifty 50, on the other hand, closed at 22,476,
down 173 points or 0.76 per cent.
Meanwhile, in the broader market, the BSE Midcap
index slipped 0.21 per cent to end at 42,414.53 levels, while the SmallCap
index on the BSE shed 0.55 per cent to close at 47,191.41 levels.
Key events next week
Analysts say the FM s clarification could see the markets stage a bounce-back
on Monday, provided the global cues remain supportive and March 2024 quarter
corporate earnings do not disappoint.
The markets experienced volatility throughout the
week, ultimately ending nearly unchanged amid conflicting signals. Looking
ahead to the next week, attention will be on earnings reports and global market
performance, particularly in the US," said Ajit Mishra, senior
vice-president for research at Religare Broking.
The market, analysts said, will also remain vigilant
about the Bank of England (BoE) policy and gross domestic product (GDP) data
from the euro-zone.
Back home, the next batch of Q4 earnings reports
will also drive stock-specific movements and will be on investor's radar. DR
Reddy's, Hero MotoCorp, Larsen & Toubro (L&T), BPCL, State Bank of
India (SBI), Eicher Motors and Tata Motors are some of the prominent companies
that are scheduled to announce their March 2024 quarter results in the coming
week.
A close below 22,400 for the Nifty 50 can see the
index slip towards the 22,200-21,850 range. On the upside, resistance is
expected in the 22,750-22,900 zone in case Nifty 50 moves higher, Mishra
added.
While most sectors are contributing positively
except for information technology (IT), Vinod Nair, head of research at Geojit
Financial Services believes the performance of bank stocks will also influence
the overall market sentiment.
It's advisable to consider hedged positions and
await clearer signals before making significant moves, he said.
www.business-standard.com
dt. 06-05-2024