India’s Finance Minister P. Chidambaram surprised India’s financial markets on Wednesday by watering down an unpopular transaction tax on the trading of equities and derivatives proposed in the 2004/2005 budget.
Following fierce protests from traders, Chidambaram told parliament that the 0.15% tax on the trading of government securities will be dropped, and the levy on day traders dealing in equities cut ten-fold to 0.015%.
The move was greeted with enthusiasm by the financial markets, and the Bombay Stock Exchange rallied 60 points on the back of the announcement.
"It is a win-win situation for all. The day-traders are happy, the arbitrageurs are happy, the long-term investors are happy and there is some unexpected good news for mutual funds. But he pleasantly surprised us,” an analyst with a Mumbai brokerage was quoted by the New Kerala as explaining.
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