Friday, February 29, 2008

Budget Impact for Small Investors

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Given that budget has proposed lot of savings for middle class (upto Rs. 50,000) by changing tax slabs and increasing tax incentives, the finance minister has increased short term capital tax. People will be forced to hold on to their shares for at least a year because short term capital gain has become 15 per cent. That is a positive disincentive to sell within in one year. If there is less selling pressure, the stock market will be forced to improve.

Stock Market sentiment was negative today primarily because of the short term capital tax increase. This is likely to hit small investors who wants to cash out their investment before 1 year.
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