The country’s Finance Minister Nirmala Sitharaman presented the first budget of the Modi government 3.0. While the budget announcements were happening. The stock market crashed further. By the time the budget announcement was over, the stock market had completely tanked. Sensex has suffered a fall of over 1200 points. At the same time, Nifty had also fallen by over one percent. The biggest question that has arisen is what were the announcements that led to such a huge fall in the stock market and investors lost around Rs 10 lakh crore.
In fact, the budget announcement has brought to the fore the concerns of market regulators SEBI and RBI, which both have been discussing for the past few days. In the budget, the government has increased the tax on investors buying and selling futures and options on securities. The effect of this was clearly visible in the stock market as well. Let us try to understand to what extent the government has increased the tax on buying and selling futures and options on securities in the budget.
This announcement was made on the stock exchange.
Announcing the Union Budget for 2024-25, Sitharaman proposed to increase the STT on futures and options on securities by 0.02 per cent and 0.1 per cent respectively. STT is a direct tax levied on the purchase and sale of securities listed on stock exchanges. Earlier, the STT on future sales of securities was 0.0125 per cent. The tax on the sale of an option on a security was 0.0625 per cent (for the seller) and on the sale of an option on a security where the option is exercised, the tax was 0.125 per cent (for the buyer). The increase in STT on F&O is on account of rising volumes in this segment, which has raised concerns among market regulators, the Securities and Exchange Board of India i.e. SEBI and the Reserve Bank of India.
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Another big drop in the stock market
Although after 2 pm the stock market seemed to be in recovery mode, following the decision to increase the tax on futures and options on securities, a major fall was seen in the stock market. The main index of the Bombay Stock Exchange, Sensex, fell by 1,277.76 points and touched a lower level of 79,224.32 points. This means that the Sensex witnessed a fall of 1.60 percent. However, the Sensex opened with a rise of more than 200 points and a few hours before the budget, the stock market also appeared in the green. But due to the tax imposed on the stock market investors, panic set in among the investors and the market crashed.
Big drop in Nifty
On the other hand, a major fall has also been observed in Nifty, the main index of the National Stock Exchange. According to the data, Nifty fell by 435.05 points during the trading session and touched the lower level of 24,074.20. If we look at the numbers, a fall of 1.77 percent was observed in Nifty during this period. However, today Nifty opened with a rise of 24,568.90 points, which also touched the day’s high of 24,582.55 points. With the announcement of the budget, a fall was also observed in Nifty.
Loss of Rs 10 lakh crore for investors
Due to this fall in the stock market, investors suffered huge losses. In fact, the loss or profit of investors depends on the market capitalization of the BSE. If the market capitalization of the BSE increases, investors get benefited and if the market capitalization decreases, the stock market investors get benefited. A day earlier, the market capitalization of the BSE was Rs 4,48,32,227.50 crore, which dropped to Rs 4,38,36,540.32 crore during the trading session. This means that investors have suffered a loss of around Rs 10 lakh crore. At present, the market capitalization of the BSE is visible at Rs 4,43,28,902.63 crore.
