The recalibration of Securities Transaction Tax (STT) is designed to encourage investors focus on long-term equity participation, thereby fostering healthier liquidity and more sustainable market dynamics, said Sundararaman Ramamurthy, MD and CEO, BSE, on Sunday.
In an environment of global uncertainty, this Union Budget “reinforces India’s standing as a resilient and future-ready investment destination, with capital markets that are becoming deeper, more balanced, and strategically aligned with long-term economic priorities, Ramamurthy said in a statement.
The Budget marks another significant step towards realizing the vision of Viksit Bharat, with a strong emphasis on capital formation, fiscal discipline, and the advancement of key growth pillars such as infrastructure, manufacturing, services, and SMEs.
The BSE CEO said that from a market standpoint, the measures announced — ranging from initiatives to deepen corporate and municipal bond markets, enhanced investment limits for PROl, adjustments to the buyback tax, and other reforms — are clearly development-oriented.
“The proposed public capital expenditure of approximately Rs 12 trillion (Rs 12 lakh crore) is poised to generate a substantial positive impact across the economy,” he noted.
Raamdeo Agrawal, Chairman and Co-founder, Motilal Oswal Financial Services Ltd, said the budget is a masterstroke for India’s digital future.
“However, we must be realistic about the impact of STT on capital markets. The STT hike and the removal of dividend set-offs seem to be bringing a headwind to markets. They make many high-frequency and arbitrage trades unviable, which will squeeze market liquidity and leverage in the short term,” he said in a statement.
But with a prudent 4.3 per cent fiscal deficit and a Rs 12.2 lakh crore capex push, the long-term earnings story remains the real hero for India,” Agrawal added.
Anand James, Chief Market Strategist, Geojit Investments Limited, said that on the face of it, the STT hike is equity positive as option trades becomes more expensive.
“Obviously, at a portfolio level, the hit on derivative segment could lead to rebalancing, and drag the equity segment in the near term. But it is hard to say that the hike alone will dissuade the speculative interest tied to derivatives market, especially the options,” he said.
