FM’s pep talk fails to calm investors

Mumbai: The equity markets closed below their Brexit day lows amidst speculation about an increase in capital gains tax rate for stock market transactions after Prime Minister Narendra Modi asked financial market players to contribute more towards nation building during his weekend visit to Mumbai.

The PM’s comment, just a month before the Union Budget was interpreted as a subtle hint about an increase in tax rates for capital market transactions. However, a clarification made by finance minister Arun Jaitley a day later that the government has no intention to impose long-term capital gains tax on investment income failed to soothe investors’ nerves.

The Nifty slipped below its key psychological support of 7,900 level mark in the intra-day trade before ending the day at 7,908.25, down 77.50 points or 0.97 per cent. The Sensex slumped 233.60 points or 0.90 per cent to close the day at 25,807.10.

According to the provisional data released by the stock exchanges, foreign portfolio investors (FPI) offloaded equities worth Rs 1,095.04 crores.

“Markets are currently facing too many headwinds from both domestic as well as global fronts,” said Jagannadham Thunuguntla, head of fundamental research at Karvy Stock Broking.

“Markets are lacking confidence and traded volumes are very low. This is one of the reasons why the markets are not getting support at lower levels. The next major trigger would be the Budget where investors would look forward to some confidence building measures from the government,” he added.