BENGALURU: Indian shares opened lower on Thursday after poor quarterly results by private lender Axis Bank added to already sour investor sentiment from the government’s tax hikes on equity investment gains and derivatives trading.
The NSE Nifty 50 fell 0.75% to 24,234.5 as of 9:21 a.m. IST, while the S&P BSE Sensex shed 0.74% to 79,544.08.
All the 13 major sectors logged losses. The broader, more domestically focussed small- and mid-caps lost about 1% each.
High weightage banks, financial services and private lenders lost 1%-1.25%. Axis Bank lost 5% after it reported a smaller-than-expected first-quarter profit. The stock was the top Nifty 50 loser.
The Nifty 50 is on course to log losses for fifth session, falling about 2.2% from record high levels, hit last week.
Three of those sessions have come after the union budget on Tuesday, in which the government hiked tax on long-term and short-term capital gains and derivatives trading.
Indian shares down after tax hike on equity investments
“While the increase in short-term capital gains tax is understandable given the need to curb excessive short-term speculation, the increase in LTCG (long-term capital gains) is regressive, especially the optics of it,” said Abhishek Goenka, founder and chief executive of treasury and wealth management firm IFA Global.
While the tax increase in LTCG may not dim the allure of equity as an asset class, it is a step backwards in terms of incentivising long-term investments, Goenka added.
Meanwhile, Asian peers were trading lower after the U.S. stocks fell overnight on weak earnings from major companies.
Infrastructure major Larsen and Toubro, which posted a quarterly profit beat on strong order execution, gained 1%.
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