Volatile Sensex ends 152 points down
Mar 01 2016 , Mumbai
The government has decided to allow up to 15 per cent foreign shareholding in domestic exchanges
Seeking to deepen the market and attract more investors, the Budget proposes tax incentives for mutual funds and new derivative products.
Significantly, the government has decided to allow up to 15 per cent foreign shareholding in domestic exchanges. This should boost investments and improve the overall functioning of the bourses.
“Higher STT on options could be a cause of concern, as it pushes up the cost for derivative participants,” Kotak Securities CEO Kamlesh Rao said.
The move could hit liquidity in the option segment, as large players like FIIs, especially hedge funds who are active in the option market, will find their cost of trade going up.
“The derivative market is a very price sensitive. Any rise in cost will eat into the margins of players, especially large FIIs,” says Vikram Dhawan, director, Equentis Capital.
Wealthy domestic investors, who number around 2 lakh, will be impacted by the 10 per cent tax on dividends in excess of Rs 10 lakh. “This will considerably reduce the dividend yield for investors in a market which is going through a downswing, said Dhawan.