Budget shock: Sensex crashes over 1,000 points, Nifty drops 300 points
By Team Asianet Newsable | First Published Jul 23, 2024, 12:41 PM ISTAn increase in STT raises the overall transaction cost of securities, which can deter buying and encourage selling. This shift in market dynamics often leads to a broader market downturn, as seen in today's plunge.
In a dramatic reaction to Union Finance Minister Nirmala Sitharaman's announcement of a proposed increase in the Securities Transaction Tax (STT) during her Union Budget 2024 speech, the stock market experienced a significant plunge. On Tuesday (July 2), the benchmark BSE Sensex dropped over 900 points, settling at 79,515.64, marking a loss of 1.23% or 986.44 points. Meanwhile, the NSE Nifty fell below Rs 24,300. This decline reflects the market's apprehension over the proposed tax changes.
What is Securities Transaction Tax (STT)?
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STT is a direct tax levied on transactions involving securities on stock exchanges, including equity shares, derivatives, and units of equity mutual funds.
Impact of increased STT on the market:
An increase in STT raises the overall transaction cost of securities, which can deter buying and encourage selling. This shift in market dynamics often leads to a broader market downturn, as seen in today's plunge.
Stocks on the rise:
Agriculture stocks saw a surge following Sitharaman's announcement of a Rs 1.52 lakh crore allocation for the agriculture sector. Companies like Kaveri Seed Company Ltd, Coromandel Agro Products and Oils Ltd, Dhanuka Agritech Ltd, and Nova Agritech Ltd saw their shares rally by up to 10%.
Stocks facing losses:
Stocks in sectors such as energy and finance faced heavy losses. ONGC, Shriram Finance, Hindalco, SBI Life Insurance, BPCL, and Reliance were among the top decliners, contributing to the overall negative sentiment in the market.
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