Shock Hike in Transaction Tax, Gold & Silver Selloff Deepen India Stock Gloom

Good morning!

I’m Ashutosh Joshi, an equities reporter in Mumbai, with the lowdown on Sunday’s federal budget and what it means for markets.

The budget was expected to bring some relief for India’s struggling stocks. Instead, it’s done the opposite, with the abrupt hike in tax on equity derivatives trades putting a chill on retail investor sentiment. In response, the Nifty 50 plunged 2% in Sunday’s special trading session — its worst budget-day reaction since 2020. Brokerages and exchange stocks bore the brunt, tumbling alongside the broader market. At the same time, metal shares — one of the few bright spots in India’s market — also plunged, tracking the selloff in gold and silver. The cautious mood in Asia on Monday suggests there is little chance that local shares will see any respite.

India’s sovereign bonds too are expected to slide after the government said it will borrow a record 17.2 trillion rupees ($187 billion) in the year starting April 1, exceeding economists’ estimates.

In today’s special newsletter, we cover specific sectors that stand to gain or lose from various budget proposals.

But first, a look at history.