Why Stock Market Fell After The Union 2024 Budget

It appears that the investors are not so pleased with the 2024 Union Budget, causing a steep plunge in the stock market. As Finance Minister Nirmala Sitharaman proposed increasing taxes on market gains, Indian stock market benchmarks, the Sensex, and the Nifty 50 went almost 2 percent low each. Sensex fell almost 1.6 percent, and Nifty 50 plunged 1.8 percent in the intraday session.

There are two main said reasons for the fall. The proposed increase in the rate of Security Transactions Tax (STT) on F&O (Future & Option), aiming to discourage retail investors’ participation in the risky instrument, appears to play in the plunge in the market.

“It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625 per cent to 0.1 per cent of the option premium, and on sale of a futures in securities from 0.0125 per cent to 0.02 per cent of the price at which such futures are traded”, said Sitharaman during her Budget speech.

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The move comes after the Economic Survey raised concerns over the raising retail investors’ interest in derivative trading.

Another reason is the increase in the LTCG (long-term capital gains) on all financial and non-financial assets from 10 percent to 12.5 percent. She also said that the STCG (short-term capital gains) on certain financial assets shall increase from 15 percent to 20 percent. The LTCG tax exemption limit was also raised to ₹1.25 lakh from ₹1 lakh.

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Sitharaman also announced that the income from the buyback of shares will be taxed at the hands of the recipient.

All these appear to have constituted to the displeasure shown by the investors in the 2024 Union Budget.