Stocks set to be volatile; may slip up to 3% if announcements disappoint

The stock market, which is expected to remain volatile on Monday, when the Union Budget for 2016-17 will be presented, could slip as much as three per cent if the announcements disappoint participants.

The market is expecting fiscal prudence, a reduction in the corporation tax rate and positive measures on public-sector banks to lift sentiment. On the other hand, an increase in holding period for long-term capital gains tax on equities (from one year to three years) or an increase in direct tax or dividend distribution tax will prove a dampener.

“The market could fall two-three per cent if the Budget disappoints. If there are big negative surprises, the National Stock Exchange benchmark Nifty could even fall to the 6,500 level in the near term,” said Dalton Capital Advisors (India) Managing Director U R Bhat. He, however, added that a lot of negative news flow had already been factored in ahead of the Budget; this could limit the decline.

There is a fear among market participants that the finance minister might raise the holding period for equities to qualify as a long-term capital asset.

For more visit: Business-Standard

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