The stock markets may see a relief rally this week after the Centre removed enhanced surcharge on FPIs and unveiled measures to jumpstart growth, analysts said.
The Budget proposal to hike surcharge on FPIs had spooked foreign investors, who withdrew over $3.4 bn (Rs 24,500 cr) from domestic equities in July and August. The massive capital outflows also put pressure on the rupee, which slumped to 72-level against the dollar last week.
“Withdrawal of enhanced surcharge on FPI is a big positive for Indian markets as it could reverse the outflows seen since post Budget. It should also help INR appreciation. Overall, a good sentiment booster for the Indian economy,” said Rusmik Oza, Head of Fundamental Research, Kotak Securities.
The Centre also announced a raft of measures to revive growth momentum, including exempting startups from ‘angel tax’, a package to address distress in the auto sector and upfront infusion of Rs 70,000 cr into PSBs.