BSE Sensex and NSE Nifty ended on a high yesterday as the rumours of the government doing away with the higher tax on Foreign Portfolio Investors (FPI) loom large. Both Sensex and Nifty made significant gains yesterday and have opened strongly today.
Nirmala Sitharaman, the Finance Minister of India, is expected to hold a meeting with the representatives of the financial sector today. Mint reported that the government is aware of the FPI surcharge concern and some relief might be announced soon, and this has made the stock markets surge.
BSE Sensex rose 350 points, and Nifty was on the brink of touching the mark of 11,150 points. The auto and banking stocks led the gains in the stock markets. Stocks of Axis Bank, HDFC Bank, ICICI Bank, Bajaj Finance, Maruti, and L&T rose between 1% and 2.5%, while Vedanta recorded a gain of 3.5%.
The Indian rupee was on the rise on the back of reports saying the government will roll back the increased surcharge on the FPIs registered as trusts and associations. The rupee closed at 70.70 against the US dollar yesterday and was trading at 70.56 a dollar in the early hours today.
Nirmala Sitharaman increased the surcharge on the super-rich and FPIs in the Union Budget 2019-20 presented on 5 July 2019. Before that, the FPIs had invested Rs 10,384.54 crore in the Indian capital market in June 2019 on the back of the return of the BJP-led government. Unfavourable budget amendments made them pull out nearly Rs 3,800 crore in July 2019.
The Indian stock markets had fallen when they were touted to boom. Now, there is a sign of revival as the government is looking at addressing some of the investors’ concerns. It is expected that the stock markets to touch record levels if the government addresses the inconsistency in the taxation of capital gains.
Coming to the Asian markets, they opened on the higher side after a good session on Wall Street. The S&P index rose by 2% as the yuan has gained some stability. If the Chinese allow their currency to devalue further, then it may impact the currencies of Indonesia, Malaysia, India, and Thailand.