New Delhi's Budget Pulls Rug From Under India ETFs

“It looks like we’re creating a fairly aggressive tax regime for equity investors,” Saurabh Mukherjea, chief executive of Ambit Capital, told the Financial Times. “It feels like a classic case of throttling the goose that lays the golden eggs.”

Nevertheless, bullish traders argued that share prices are still underpinned by an ongoing structural shift in Indian savings toward financial assets, which should help support any market oscillations.

The strong uptrend in India’s equities market has been supported by a growing long-term shift in individual investment behavior as Indian households increasingly shift from their traditional real estate investments and look toward financial assets.

“Equities will still be attractive — 10 per cent is not that big a tax,” Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance, told FT. “The structural shift from real assets to financial assets will not be punctured by this.”

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