Global brokerage Jefferies said the recent hike in Securities Transaction Tax (STT) appears largely manageable and is being viewed more as a sentiment negative rather than a structural concern for capital markets.
According to Jefferies, industry checks suggest that the STT increase could result in around a 5% impact on trading volumes. The brokerage noted that a 5% drop in average daily turnover or orders could translate into an estimated 4% earnings impact for platforms such as BSE and Groww.
Separately, Bernstein assessed the budget impact across capital markets and insurance, stating that derivatives are likely to bear the brunt of the changes, while insurance remains a non-event.
Bernstein said higher STT is likely to soften sentiment across the derivatives value chain. The brokerage added that higher frequency trading profitability may compress, which could hurt Nuvama due to a reduced profit pool.
On the insurance side, Bernstein noted that there were no major policy or tax changes announced, and there was no mention of commission reforms. As a result, the brokerage said the budget impact remains neutral for PB Fintech.
Bernstein added that investor focus is now likely to shift towards the IRDAI consultation paper in the coming months.
Disclaimer: This article is based solely on the brokerage inputs provided. The views expressed are those of the respective brokerages and do not constitute investment advice or recommendations by the publication.
