If domestic flows into equities slow down’: Nomura India shares Nifty target, says this on LTCG, STT, STCG tax
Stock market outlook: Nomura India said it remains constructive in the long term, given macro stability and expectation of sustained earnings growth.
Nomura India in its latest note said it does not expect the Union Budget announcements to have any material impact on near-term corporate earnings. The foreign brokerage, however, believes that market valuation multiples can face headwinds if the domestic flows into equities slow down following revisions in short- and long-term capital gains tax. The brokerage has a Nifty that suggests limited upside for the NSE barometer from here till 2024 end.
The long-term capital gains tax (LTCG) on all financial assets, including equity, has been hiked to 12.5 per cent from 10 per cent. The short-term capital gains tax has been raised to 20 per cent from 15 per cent earlier. The Security Transaction Tax (STT) on futures has been upped to 0.02 per cent from 0.01 per cent while the STT on options has been increased to 0.1 per cent from 0.062 per cent. This will be effective from October 1.
Nomura India said there are concerns that the rate may be further raised in coming years. The Finance Secretary in media interaction, however, suggested that there are no such intentions. The secretary also highlighted that 88 per cent of value of LTCG come from individuals with annual income above Rs 15 lakh.
