HDFC Securities' Varun Lochab discusses the recent Securities Transaction Tax (STT) hike, stating it is unlikely to significantly impact brokers like Angel One and BSC. Market sentiment and outlook influence trading volumes more than STT changes. The firm remains positive on capital market stocks and welcomes changes in buyback taxation, anticipating increased buybacks. They advise maintaining 10-15% exposure to precious metals despite recent volatility.
In a recent discussion on CNBC TV18, Varun Lochab, Head of Institutional Research at HDFC Securities, shared his insights on the impact of the recent Securities Transaction Tax (STT) hike on brokers, the outlook for capital market stocks, changes in buyback taxation, and the current scenario in precious metals investments.
The recent increase in STT rates came as a surprise to many market participants and initially dampened market sentiment. However, after thorough analysis, HDFC Securities does not foresee a significant negative impact on exchanges or broking companies such as Angel One and BSC.
Past instances of STT hikes have not led to substantial declines in trading activity. Market outlook and overall sentiment play a far more critical role in influencing trading volumes than the STT rate itself.
HDFC Securities maintains a positive outlook on capital market stocks in both the short and medium term. They have been bullish on companies like BSC and MCX for some time, with MCX continuing to be a top pick in their model portfolio.
From 2024, buybacks are taxed as dividend income, which led to a decline in buyback offers by companies. However, recent changes have aligned buyback taxation more closely with capital gains tax.
The IT sector, known for frequent buybacks, may particularly benefit from this change.
Precious metals experienced a rapid price increase at the start of the year, followed by a sharp correction. HDFC Securities had turned cautious on gold and silver towards the end of the previous year and early January due to the swift price movements.
Varun Lochab's insights provide a comprehensive view of the current market dynamics. Despite the STT hike, brokers are expected to remain resilient, and capital market stocks hold promise. The changes in buyback taxation are likely to stimulate corporate buybacks, enhancing shareholder value. For precious metals, a balanced and measured approach to investment is advised, maintaining steady exposure without overreacting to short-term price fluctuations.
Stay tuned for further market updates and expert analyses to navigate the evolving financial landscape effectively.
