FPI
Foreign investors pull out $1.27 billion from Indian stock market after Union Budget
Mumbai/IBNS: Foreign portfolio investors (FPIs) have taken out almost Rs 10,710 crore ($1.27 billion) from the Indian stock market in the last three days after the government, in the Union Budget, raised taxes on derivatives trades and on capital gains from equity investments, reports said.
On July 23, FPIs sold equities worth Rs 2,975 crore, another Rs 5,130 crore on July 24 and Rs 2,605 crore on July 25, as per stock exchange data.
During the same time, domestic institutional investors bought stocks worth around Rs 6,900 crore since July 23, according to reports.
The Sensex had fallen just 463 points to 80,039.80 after Union Finance Minister Nirmala Sitharaman presented the Budget on July 23, aided by domestic buying support.
Ahead of the Union Budget, between July 12 and 22, foreign portfolio investors had bought equities worth around Rs 18,000 crore as they anticipated a host of reform measures.
Finance Minister Nirmala Sitharaman, in the Union Budget, made major announcements with respect to capital gains tax whereby the rate of tax on long-term capital gains (LTCG) is proposed to be made 12.5 percent for all types of assets, irrespective of the transferor being a resident or a non-resident, as reported by the Indian Express.
According to reports, FPIs are seeing the rise in capital gains tax as a negative even though the increase on long-term gains is moderate.
However, with the increase of Securities Transaction Tax (STT) rates on Futures and Options, the cost of trading will also rise.
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