Nifty 50 Turns Red by 1% as FM Sitharaman Unveils Budget 2024

On the afternoon of July 23, both the Sensex and Nifty indices saw sharp declines, each losing over 1%. This followed Finance Minister Nirmala Sitharaman's announcement of higher capital gains tax and an increased securities transaction tax (STT) on futures and options (F&O) trading during the 2024 Budget presentation.

Before the Budget release, the Nifty 50 experienced volatility, oscillating between gains and losses as traders approached the market with caution.

By 11:19 am IST, the Sensex had fallen by 105.39 points (0.13%) to 80,396.69, while the Nifty had dropped by 41.60 points (0.17%) to 24,467.70. Check Union Budget 2024 - Live Updates & News

This negative trend extended to broader markets, with the Nifty Junior down by over half a percent, and declines in both small-cap and mid-cap indices. Prior to the Budget announcement, only the Nifty Realty and Nifty FMCG indices showed gains, while all other sectoral indices were in the red, with Nifty Metals and Nifty Energy being the top losers.

The budget highlighted nine priorities: productivity and resilience in agriculture, employment and skilling, inclusive human resource development, manufacturing, energy security, infrastructure, innovation, and next-generation reforms.

"Going into the Budget, the market will be trading cautiously. The pressure on the broader market is likely to continue since there is more scope for profit booking," noted V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, before the budget.

In the previous session, markets ended nearly flat, reflecting cautious sentiment ahead of the Union Budget. The Nifty index opened lower and fluctuated before closing at 24,509.25. Weak global cues and pressure on major stocks like Reliance and Kotak Bank, following their earnings reports, dampened sentiment.

"However, the strength in banking major HDFC Bank, following its results, and continued buoyancy in IT heavyweight Infosys helped offset the negativity," commented an analyst.

Bearish sentiment intensified as most sectors traded in the red. Broader markets were also affected, with BSE Midcap and BSE Smallcap indices dropping up to 1%. Approximately 873 shares advanced, 2,482 shares declined, and 75 shares remained unchanged. The fear gauge, India VIX, stayed elevated at 15 in afternoon trade.

The 2024 Budget raised short-term capital gains tax on certain financial assets from 15% to 20%, and long-term capital gains tax on all financial and non-financial assets from 10% to 12.5%. Additionally, income from share buybacks was taxed at the recipient’s hands, and the STT rate on F&O transactions was increased from 0.01% to 0.02%.