Impact of Budget on Markets?

Alchemist

Administrator
Staff member
#1
How do you think the market will react to the budget?

Personally, I am not sure what will happen.

The key things that I think will impact the markets are:

1. Fiscal deficit going forward. Indication of excessive social spending will be bearish for bond prices and NBFCs will be major casualties.
2. Corporate tax rates. The government had promised reduction in tax rates but it will be a difficult this year. If a tax cut indeed happens, this one factor will be enough to add 200-300 points to the Nifty.
3. Changes in dividend distribution tax and STT will be important.
4. Reintroduction of LTCG tax on stocks will be a disaster for the market.
 

ramkasi

Active member
#3
Personally, I am not sure what will happen.


3. Changes in dividend distribution tax and STT will be important.
4. Reintroduction of LTCG tax on stocks will be a disaster for the market.
My guess is

melt-up :elefant: or melt down :banghead:

my wish is

kill STT and bring back life in LTCG [tax on above certain amt. like 5 lakhs and above in a FY]

I calculated my charges clearly as a trader I am paying more tax bcoz of stt.

stt is a thing I do not like. But, I think nothing will happen in the budget except increasing in holding period for LTCG.

Personally I have exited about 40 % of holdings and 25 % in big stocks which are bonus shares.

35% of PF is vulnerable to 2morrow D-Day with a single hi-risk stock which is 15%.
 

ramkasi

Active member
#4
My guess is

melt-up :elefant: or melt down :banghead:

my wish is

kill STT and bring back life in LTCG [tax on above certain amt. like 5 lakhs and above in a FY]

I calculated my charges clearly as a trader I am paying more tax bcoz of stt.

stt is a thing I do not like. But, I think nothing will happen in the budget except increasing in holding period for LTCG.

Personally I have exited about 40 % of holdings and 25 % in big stocks which are bonus shares.

35% of PF is vulnerable to 2morrow D-Day with a single hi-risk stock which is 15%.
My guess went horribly wrong

LTCG is back

i pay tax if i buy
i pay tax if i sell
i pay tax if i get profit
i pay tax even if i get loss from trade

Now here is LTCG

I hate markets now, I will lower my activity in market trading, thus by reducing STT .

I don't care if I make less money or NO MONEY also. I don't care.
 
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#6
According to me govt should abolish both LTCG and STCG tax. Govt can earn more money by increasing STT or introducing transaction tax for payouts to clients bank accounts. Govt can introduce different slabs. those who make higher payouts should be taxed at higher rate and those with lower payouts with lower rates. why should govt wait for people to pay tax when govt can collect tax as soon as trade or payout is done?

Govt should concentrate on creating more productive jobs in manufacturing sector than creating unproductive jobs in financial sector. Why should govt waste our time and money when govt can earn TDS when transactions are done?
 

Alchemist

Administrator
Staff member
#7
Govt can earn more money by increasing STT or introducing transaction tax for payouts to clients bank accounts.
I think STT is already too high.

The STT collected by discount brokers exceeds their revenues by a wide margin.

Increasing STT will destroy the liquidity in the market.

Even at current rates, it is very difficult to make money from scalping, arbitrage etc in the market.

I think a better option is to tax demat transactions.

e.g. Every time a stock is moved in or out of demat accounts of exchanges it should be taxed.
 
#8
I think STT is already too high.

The STT collected by discount brokers exceeds their revenues by a wide margin.

Increasing STT will destroy the liquidity in the market.

Even at current rates, it is very difficult to make money from scalping, arbitrage etc in the market.

I think a better option is to tax demat transactions.

e.g. Every time a stock is moved in or out of demat accounts of exchanges it should be taxed.
On Budget day, Govt. managed to save the fall with the help of LIC, SBI etc. Let's see if its just a start of the fall or its just a quickie to pass away soon. Factors like Bond Yield rise worldwide and LTCG with STT should show the blood in the street.
 

Alchemist

Administrator
Staff member
#9
On Budget day, Govt. managed to save the fall with the help of LIC, SBI etc. Let's see if its just a start of the fall or its just a quickie to pass away soon. Factors like Bond Yield rise worldwide and LTCG with STT should show the blood in the street.
Suddenly many factors have turned negative. Some already existed but people have started noticing now.

1. Valuations are really stretched - especially in the mid cap and small cap segments.

2. Many second tier stocks have been manipulated or have risen with the support of highly leveraged positions. If these positions are unwound in a hurry, these stocks will collapse. That is exactly what happened with PC Jeweller, JustDial, Ceat etc today.

3. LTCG tax is a dampener for sure.

4. Fiscal deficit is again becoming a worry, at least for the observers.

5. Higher government borrowing and rising prices will exert an upward pressure on interest rates in the next few quarters.

6. Global markets seem to be going into a correction. The US stock market has been in a bull market for last 9 years. A significant correction is long overdue.
 

ramkasi

Active member
#10
I think STT is already too high.

Increasing STT will destroy the liquidity in the market.
Yes, adminjee I feel too that STT on a higher side. LTCG introduced at least with out any cut in STT charges. I don't like this move bcoz STT was introduced withdrawing LTCG. as far as I remember.

then how they both exist simultaneously

I would felt happy if the relaxation is at least 3,00,000 rs. for LTCG or ltcg tax at 5%

This budget successfully changed my attitude :evil:, once I did not claimed excess payed tax [that is a big amount for me at that time] NOW MY AIM IS to do every thing to pay NO TAX or less tax.

The money which I saved before budget by the way of FD from exiting equity investment, I am damn sure at least 60% of that money will WILL not come BACK to equity regardless of what nifty do :mad: I don't care even if nifty reach 20k mark in next 4 years. :mad:

I don't know why sri.modi jee and sri.jaitly want more tax from middle-class person who are investing in RISKY market which offers NO guarantee to even PRINCIPLE AMOUNT and often they stand in the losing side and also pays STT regardless of profit or loss :hmpf:.

ramK
 
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#11
Suddenly many factors have turned negative. Some already existed but people have started noticing now.

1. Valuations are really stretched - especially in the mid cap and small cap segments.

2. Many second tier stocks have been manipulated or have risen with the support of highly leveraged positions. If these positions are unwound in a hurry, these stocks will collapse. That is exactly what happened with PC Jeweller, JustDial, Ceat etc today.

3. LTCG tax is a dampener for sure.

4. Fiscal deficit is again becoming a worry, at least for the observers.

5. Higher government borrowing and rising prices will exert an upward pressure on interest rates in the next few quarters.

6. Global markets seem to be going into a correction. The US stock market has been in a bull market for last 9 years. A significant correction is long overdue.
Yes, Valid Points. Yesternight, Dow Jones dived 2.5% further. Let's hope to see the real bloodbath from Monday :).
 
#12
I think STT is already too high.

The STT collected by discount brokers exceeds their revenues by a wide margin.

Increasing STT will destroy the liquidity in the market.

Even at current rates, it is very difficult to make money from scalping, arbitrage etc in the market.

I think a better option is to tax demat transactions.

e.g. Every time a stock is moved in or out of demat accounts of exchanges it should be taxed.
What is your view on TDS on (net) payouts? I think its better than tax demat transactions. Those who make huge profits will take huge (net) payouts. When payouts are made, take TDS at highest slab rate. At the end of month check which slab each account holder belong according to net payout and refund money to those belong to lower slabs. If most tax payments are made automatic (TDS) then most tax payers will have to spend time and money only to claim refunds and not for paying tax. This will reduce tax evasion. There are many people who don't pay tax due to complexities of paying tax.
 
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