Jefferies predicts bigger risk than elections for stock market after June 4

Worldwide brokerage company Jefferies has actually cautioned that the stock exchange deals with a larger danger than the result of the continuous Lok Sabha elections.

The business’s international head of equity technique, Christopher Wood, highlighted prospective modifications in capital gains tax as a big issue.

The outcomes of the Lok Sabha elections are anticipated to be revealed on June 4, with the judgment BJP expected to maintain power.

Jefferies kept in mind that a “remarkably bad result” for the BJP might set off a correction in the stock market.

Wood thinks a BJP defeat in the 2024 elections is “incredibly not likely,” he pointed out that markets might respond more greatly than the 17% drop experienced in 2 sessions following the 2004 election outcomes.

“A repeat of the shock BJP defeat in 2004 stays not likely in the extreme. At that time the Sensex fixed by 17% in the 2 days after the election results on May 13, 2004,” stated Wood.

Wood highlighted that a more instant danger to the marketplace might be modifications in capital gains tax, possibly revealed in the union budget plan in July.

“Such modifications might be revealed in the Budget which is expected to be revealed in July after the election. The problem here is whether the tax rates will be raised or whether the duration to receive long-lasting gains will be extended, or a mix of both. The existing routine is that short-term capital gains is imposed at 15% and long-lasting gains at 10% with the holding duration specified as one year,” he stated.

He described that these modifications might consist of increased tax rates or a prolonged duration to receive long-lasting capital gains, or both.

“An extension of the duration would, in GREED & & worry s see, be much better than raising the rates. Another proposition being drifted would be to increase capital gains tax for retail financiers however not for those purchasing shared funds. The factor that such propositions are obviously under factor to consider is growing proof of retail speculation, most especially in the alternatives market where India has choices for 182 private stocks,” he stated.

Presently, short-term capital gains in India are taxed at 15%, while long-lasting gains are taxed at 10% with a holding duration of one year.

He even more stated that there is likewise a proposition to increase the capital gains tax for retail financiers however not for shared fund financiers.

Stock alternatives notional turnover increased from Rs 123 lakh crore in FY20 to Rs 921 lakh crore in FY24, and has actually reached Rs 169 lakh crore up until now in FY25 considering that April 1.