Investors shrug off tax hikes and weak earnings, drive Nifty up 1.76%
₹7 trillion on Friday as institutions scooped up cash shares and derivatives, backed by retail participation through mutual funds. Market veterans were puzzled by the surge, which follows the surprise tax hikes in the Union budget and weak earnings in the banking sector. The Union budget raised the long-term capital gains tax on profits from share sales to 12.5% above ₹1.25 lakh from 10% above ₹1 lakh, while increasing the short-term capital gains tax to 20% from 15% earlier.
Market experts said the market reaction shows investors have taken it in their stride. The 50-share Nifty hit a fresh high of 24861.15, surpassing its previous record of 81587.76 on 19 July, before closing at 24834.85, driven by Infosys, Bharti Airtel, ITC, Reliance Industries and Mahindra & Mahindra, accounting for over a third of the index’s movement. The Sensex, which failed to cross its record high of 81587.76 on 19 July, closed up 1.62% at 81332.72.
After three straight days of selling ₹7,255 crore worth of shares, foreign institutional investors (FIIs) purchased a provisional ₹2546.38 crore on Friday, while domestic institutions purchased a provisional ₹2774.31 crore, totalling ₹6,988 crore of buying since the budget, show Bloomberg and BSE data. FIIs resumed buying on data which showed the US economy expanded by 2.8% in the June quarter, bettering estimates of 2% polled by economists polled by Reuters, which drove US benchmarkshigher. Retail investors who buy directly on NSE invested ₹5178 crore on 23-24 July, show NSE data, while data for Thursday and Friday was awaited.
Overall market cap hit ₹452.93 trillion on the NSE. Market breadth was firmly in favour of advances, with two stocks advancing for every one that declined. “Frankly, given
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