On Tuesday, July 23, the Indian stock market demonstrated remarkable resilience, recovering from substantial early losses to close nearly flat. This recovery came despite Finance Minister Nirmala Sitharaman's announcement of hikes in capital gains taxes.

Market Performance

During the trading session, the Sensex and Nifty 50 benchmarks experienced significant volatility. Initially, the markets plummeted nearly 2% in reaction to the announced tax increases:

Sensex: Dropped by 1,278 points, or 1.6%, to 79,224.32.

Nifty 50: Fell by 435 points, or 1.8%, to 24,074.20.

However, by the end of the session, the key indices managed to recover most of their losses:

Sensex: Closed 73 points, or 0.09%, lower at 80,429.04.

Nifty 50: Settled 30 points, or 0.12%, down at 24,479.05.

Mid and Smallcap Indices

The BSE Midcap and Smallcap indices underperformed compared to the frontline indices:

BSE Midcap index: Declined by 0.74%.

Smallcap index: Ended 0.18% lower.

Top Contributors and Drags

Several stocks played significant roles in the market's performance on July 23:

Top Drags on Nifty 50: HDFC Bank, Larsen & Toubro, Reliance Industries, and ICICI Bank.

Top Contributors: ITC, Titan, Infosys, and NTPC.

Capital Gains Tax Hikes

Finance Minister Nirmala Sitharaman's announcements included increases in various capital gains taxes, which initially rattled the markets:

Securities Transactions Tax (STT):

Options: Increased from 0.0625% to 0.1% of the option premium.

Futures: Increased from 0.0125% to 0.02% of the price at which such futures are traded.

Long-Term Capital Gains (LTCG) Tax: Increased from 10% to 12.5% on all financial and non-financial assets.

Short-Term Capital Gains (STCG) Tax: Increased from 15% to 20% on certain financial assets.

Conclusion

Despite the initial sharp decline following the announcement of capital gains tax hikes, the Indian stock market benchmarks demonstrated resilience by recovering most of their losses by the end of the session on July 23. The frontline indices, Sensex and Nifty 50, closed almost flat, showcasing the market's ability to shrug off concerns over the revised tax rates. While mid and smallcap indices underperformed, key contributors and drags highlighted the mixed sentiment across various sectors.

This performance underscores the dynamic nature of the stock market and its capacity to stabilize amidst policy changes and economic developments. Investors will continue to closely monitor the impact of these tax revisions on market sentiment and long-term investment strategies.

Also Read : Key Budget Highlights 2024: Essential Announcements and Updates

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