Budget Buzz

Stock Markets: Stock markets are witnessing an unprecedented boom. With the Sensex near all-time high levels in the pre-Budget rally, the ma...

Stock Markets: Stock markets are witnessing an unprecedented boom. With the Sensex near all-time high levels in the pre-Budget rally, the markets want more sops so that the bull party can go on and on….

Buzz in the Mart

• Markets are expecting a reform-oriented budget with a cut in taxes and a hike in foreign investment limit in more sectors.

• Changes in securities transaction tax as well as more clarity on tax in derivative instruments.

Story continues below this ad

• Investors feel the government will keep tax sops on dividend unchanged. But some exemptions on small savings schemes might go.

BUDGET RECAP 2004

• The government introduced securities transaction tax on share trading for the first time.

• Investment ceiling for FIIs in debt funds raised from $1 billion to $1.75 billion. No change in dividend tax sops on equity funds.

• Overall tax rationalisation helped market. But it rejected the 2% education cess and service tax hike.

FDI hike in some sectors boosted stocks.

WHAT I DON’T EXPECT IN BUDGET 2005

Story continues below this ad

• I don’t expect any major changes for the capital market this time.
— Hemendra Kothari, chairman, DSP Merrill Lynch.

• Markets are already riding a boom. I’m not expecting any major cut in taxes as the government will have to make provisions for VAT loss.
— Pawan Dharnidharka, dealer, BSE

• I think the amendment to Section 72 of IT Act which deals with speculation income may be clarified but I don’t think the government will be fiddling with the STT.
— Dina Mehta, Broker, BSE

PERFORMANCE SNAPSHOT

It was the year of bulls for bourses. The Sensex rose over 36 per cent since July 8, 2004 and most of the pivotals are now at 52-week high levels, thanks to good performance by corporates and the economy. FIIs were the major drivers of the Sensex which crossed 6,700 in February.