Sensex rebounds from 2,300-point fall after Budget proposals spark volatility

Mumbai (PTI): Benchmark equity indices Sensex and Nifty pared losses in late afternoon trade on Sunday after initial volatility triggered by the Union Budget’s proposed hike in Securities Transaction Tax (STT) on commodity futures and changes to the taxation of share buybacks.

The 30-share BSE Sensex, which had plunged more than 2,300 points earlier in the session, recovered part of its losses to trade at 81,666.10, while the NSE Nifty stood at 25,109.50.

Markets had come under pressure after the Budget proposed raising STT on commodity futures to 0.05 per cent from 0.02 per cent. Finance Minister Nirmala Sitharaman also announced that buyback proceeds will be taxed as capital gains for all categories of shareholders, adding to investor caution.

Among Sensex constituents, Bharat Electronics remained the top laggard, while State Bank of India, HCL Tech, Tata Steel, Asian Paints and Eternal also traded lower. On the positive side, Sun Pharma, Kotak Mahindra Bank and Tata Consultancy Services were among the gainers.

“The increase in STT, particularly in futures and options, could act as a near-term negative for foreign portfolio investor flows, especially for high-frequency and derivative-focused global funds,” said Aakash Shah, Technical Research Analyst at Choice Equity Broking.

Foreign institutional investors had bought equities worth Rs 2,251.37 crore in the previous session, according to exchange data.

Asian markets remained closed on Sunday due to holidays, while US markets ended lower in the last trading session.