Indian shares keep falling after tax hike on equity investments
Updates to close
By Manvi Pant and Bharath Rajeswaran
BENGALURU, July 24 (Reuters) -Indian benchmarks fell onWednesday, dragged by financials, with sentiment still sour a day after the government raised the tax on gains from equity investments.
The NSE Nifty 50 .NSEI fell 0.27% to 24,413.5, while the S&P BSE Sensex .BSESN settled 0.35% lower at 80,148.88.
The tax hike on long-term capital gains "certainly increases the hurdle for investors in financial assets and hence it is a sentimental negative," said Harish Krishnan, co-chief investment officer and head of equity at Aditya Birla Sun Life Asset Management Company.
The blue-chips hadslipped 1.6% in the previous session after the government hiked the tax rate on equity derivatives trades and on profit from equity investments. However, ajump in consumer stocks helped the indexes recover to end with relatively lower losses.
"The tax hikes have overshadowed the positives from the budget," Krishnan added.
Six of the 13 major sectors logged losses, on the day.
Banks .NSEBANK, financial services .NIFTYFIN, private banks .NIFPVTBNK dropped 0.6%-1%.
Top private lenders HDFC Bank HDBK.NS, ICICI Bank ICBK.NS and state-owned lender State Bank of India SBI.NS lost between 0.3% and 1.5%.
The drop in financials could be due to likely selling by foreign investors, who have higher ownership in the sector than other segments, according to two analysts.
Non-bank lender Bajaj Finance BJFN.NS fell about 2% after missing June quarter profit estimates on higher provisions and rising credit costs.
Private life insurer ICICI Prudential Life ICIR.NS jumped 8.75% after posting profit growth in June quarter. Other life insurers like HDFC Life HDFL.NS and SBI Life Insurance SBIL.NS gained 4.5% and 2.4%, respectively, on improving earnings outlook in the sector.
The broader, more domestically focussed small- .NIFSMCP100 and mid-caps .NIFMDCP100 recovered from a muted start to close 1.75% and 1% higher, respectively.
The adverse impact from budget is likely to be only temporary as fiscal prudence and rural focus could spur a return to normalcy in Indian markets, said Pranav Haridasan, managing director and chief executive at Axis Securities.
Reporting by Manvi Pant and Bharath Rajeswaran in Bengaluru; Editing by Eileen Soreng, Savio D'Souza and Nivedita Bhattacharjee
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