'Any tax hike on equities may impact investor sentiment'

livemint.com:

. However, in the event of any political surprise, the markets will witness a significant downturn, requiring a substantial amount of time to bounce back. Additionally, any tax hike on equities, at the very least, will result in an equivalent and opposite price reaction, which would overshadow any other positives, Arora added.

Edited excerpts: Indian markets (NSE 500) are up approximately 18% per annum over the past five years against an average of 14-15% earlier. This can be justified by several reasons. India has become a big market, compounding over time, which can no longer be ignored.

This has forced foreigners to look at it more seriously. Indian investors have also taken to the stock market since demonetization and covid, and are committing higher proportions of their savings into equities. India's gross domestic product (GDP) growth is robust.

Various reforms, digitization and formalization have helped the corporate sector. There is excitement around the possibility of further reforms, and improvement in ease-of-doing-business, cementing India's position in a new world order, where people are disenchanted with China to some extent. India is the new favourite of global investors and corporates.

All in all, India is doing good economically, and that is reflected in the stock market. Our post-elections strategy has to be implemented now, though the final push will be done after 4 June. Overall, we expect BJP and NDA to comfortably form the government, and expect a market-, economics- and reform-friendly budget.

So, we continue to be bullish. The only potential set back to this strategy (and it could be significant) is if the government decides to increase capital gains tax in any shape or form. There is a