Mumbai (Maharashtra) [India], May 3 : The stock market witnessed a downturn at the close of trading on Friday, with selling pressure in index heavyweights dragging both the Nifty and Sensex into the red. Rumors circulating in the market regarding potential tax changes in the upcoming Union Budget of July 2024 added to the negative sentiment.
The Sensex plummeted by 732.96 points, closing at 73,878.15, while the Nifty dropped by 172.35 points, ending the day at 22,475.85.
Among the Nifty companies, there were 13 advances and 37 declines.
Notable gainers among the Nifty firms included Coal India, Bajaj Finance, Grasim, Tata Consumer Services, and ONGC. However, Bharti Airtel, Reliance, Nestle India, Maruti, and JSW Steel were among the top losers.
According to market expert Ajay Bagga, there were rumors suggesting that tax treatment for all asset classes would be equalized in the upcoming budget, bringing long-term capital gains to the marginal tax rate.
Bagga emphasized that while the actual revenue impact of such a move is doubtful, the rumors had a significant negative impact on market sentiment.
Bagga commented on the market situation, stating, "There was selling in index heavyweights that brought the Nifty and Sensex down. There were rumors in the market that tax treatment for all asset classes will be equalized in the Union Budget of July 2024. This would bring long-term capital gains to the marginal tax rate. The actual revenue impact of such a move is doubtful, but the sentimental damage done is much more."
He added, "With Rs 36,000 crores collected at source under STT, a clean, low-cost, and zero leakage tax is already in place for stock market investors. These rumors led to widespread selling today. As such, there is no basis to such a move on the part of the finance ministry, but in the days of social media and fake news, such rumors get amplified very fast. We stay positive on the markets and recommend buys at every dip. Tax treatment is outside the investor's control and not something that should determine asset allocation."
The market's reaction reflects the nervousness among investors regarding potential policy changes and highlights the impact of rumors on market sentiment.
Despite the dip, experts remain optimistic about the market's long-term prospects and advise investors to seize buying opportunities during downturns.
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