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May 4, 2024

FM’s Denial of Capital Gains Tax Change Sparks Market Optimism

Finance Minister Nirmala Sitharaman has quashed rumors about changes in the capital gains tax structure, providing relief to investors amidst market volatility. Speculations regarding alterations in tax policies were circulating, claiming that the Income Tax (I-T) Department would introduce changes if the current government retained power after the ongoing Lok Sabha 2024 polls.

Sitharaman took to social media to dismiss these claims, stating, “Wonder where this is come from. Was not even double checked with @FinMinIndia. Pure speculation.” She emphasized the government’s commitment to maintaining policy continuity and a stable regime.

The impact of these rumors was evident on Friday, May 03, with the S&P BSE Sensex plummeting by 733 points, or 0.98 per cent. However, Sitharaman’s clarification has injected optimism into the market, with analysts predicting a potential recovery on Monday.

Ajit Mishra, senior vice-president for research at Religare Broking, highlighted the significance of global cues and corporate earnings in driving market movements. He stated, “The markets experienced volatility throughout the week, ultimately ending nearly unchanged amid conflicting signals.”

Market watchers will closely monitor upcoming events, including the Bank of England (BoE) policy announcement and euro-zone GDP data, alongside the release of Q4 earnings reports from major Indian companies. Prominent names such as DR Reddy’s, Hero MotoCorp, L&T, BPCL, SBI, Eicher Motors, and Tata Motors are set to announce their results, influencing stock-specific movements.

Vinod Nair, head of research at Geojit Financial Services, emphasized the importance of bank stocks in shaping overall market sentiment. While most sectors are performing positively, the IT sector has shown weakness. Nair advised investors to maintain hedged positions and await clearer signals before making significant moves.

Looking at technical levels, Mishra suggested that a close below 22,400 for the Nifty 50 could lead to a slip towards the 22,200-21,850 range, while resistance is expected in the 22,750-22,900 zone in case of upward movement.

In summary, Sitharaman’s clarification has provided reassurance to investors, potentially setting the stage for a market rebound on Monday. However, ongoing global events and corporate earnings will continue to shape market dynamics in the coming week. Investors are advised to stay vigilant and consider hedged positions amidst prevailing uncertainty.

 

Jhumpa Lahiri

Jhumpa Lahiri

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