The Indian stock markets touched new heights when the opinion polls predicted the BJP-led NDA government to return for another term. The post-poll survey resulted in the stock markets skyrocketing on the back of political stability, but they have gone down.
Post announcement of the election results on May 23 2019, the BSE Sensex breached the mark of 40,000 points while the NSE Nifty crossed 12,000 points. The benchmark index BSE Sensex has fallen by nearly 1,400 points post-Budget.
The slump post-Budget has left retail investors, fund managers, and traders gasping as they were relying on the newly formed Modi-led government to come up with new measures to boost the ailing economy.
The Union Budget 2019-20 has covered almost everything but, not measures to increase consumption. Also, the tax rates on the super-rich have been raised. The long-term capital gains (LTCG) tax and the securities transaction tax (STT) are not looked upon.
The stock markets were adversely affected due to an increase in the surcharge on the super-rich. The increment in the surcharge has resulted in the Foreign Institutional Investors (FPIs) pulling out nearly 1,917 crore from the Indian equities.
FPIs are one of the primary drivers of the Indian equity market. The amendments made in the Union Budget 2019-20 translated to FPIs selling and this increased considerably since July 18, 2019, when the Finance Minister clarified that the increased tax on the super-rich would not be rolled-back.
The BSE Sensex fell over 850 points when the Finance Minister clarified that there would be no roll-back in the increased taxation. Since then the FPIs have pulled out Rs 8,392.46 crore from the Indian capital markets.