Nifty, Sensex Edge Lower Post Equity Tax Hike; Financials, FMCG Drag Indices

Stock market news: Benchmark indices were little changed on Wednesday, with sentiment remaining sour following the government's recent decision to raise the tax on gains from equity investments.

As of 10:15 am, the NSE Nifty 50 fell 0.14 per cent to 24,443.95, while the S&P BSE Sensex shed 0.18 per cent to 80,285.09. The broader, more domestically focused small-cap and mid-cap indices showed little change.

"The union budget has presented short-term challenges for the markets," said Pranav Haridasan, Managing Director and Chief Executive at Axis Securities. "The rise in capital gains tax rates and the increased tax on derivatives trading are a short-term negative."

On Tuesday, the blue-chip indices slipped 1.6 per cent after the government hiked the tax rate on equity derivatives trades and on profits from equity investments. However, a jump in consumer stocks helped the indices recover to end with relatively lower losses.

Eight of the 13 major sectors logged losses on the day.

Among individual stocks, cigarette maker ITC gained 3 per cent, adding to its 5.5 per cent jump on Tuesday after the government did not raise tobacco taxes. Jeweler Titan rose 2 per cent, adding to its 6.5 per cent jump on Tuesday after the government reduced the customs duty on gold and silver to 6 per cent from 15 per cent.

"We believe the reduction in customs duty is positive for consumer demand. Titan remains the clear market leader, and a reduction in customs duty should be a positive catalyst," said Aditya Soman and Vatsal Dujari, analysts at CLSA. ITC and Titan were the top Nifty 50 gainers.

Hindustan Unilever lost 2.5 per cent after the consumer goods maker's first-quarter results showed a "slight pick-up, but still a long road ahead," according to Ambit Capital. Analysts also flagged the stock's high valuation.

(With Reuters inputs.)