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Srividhya Sivakumar

The absence of any overt negatives for the capital markets in this Budget proved to be positive, putting aside fears of an increase in STT (securities transaction tax) or capital gains tax.

The Finance Minister's decision to not tinker with these rates reflects the importance he gave to the traders and arbitrageurs for adding depth and liquidity to the capital markets.

Move on PAN

Further, the FM's decision to introduce PAN (permanent account number) as the sole identification number for all the participants in the securities market is likely to strengthen the markets by way of curbing any benaami transaction and thereby safeguarding the interests of retail investors.

Moreover, it has also reduced administrative hassles in obtaining an alternative identification number.

In an effort to improve the liquidity in the markets, the Government's decision to allow institutions to short sell settled by delivery is a positive.

The proposed system for stock borrowing and lending, when implemented, could be significant.

This would not only help improve the market depth, but will also provide more flexibility to institutions in taking short positions when markets correct.

SROs

Further, the establishment of Self Regulatory Organisations (SROs) for various market participants, once implemented, will ensure that the various groups in the capital market, such as the sub-brokers, individual portfolio managers, advisors, etc, would have a set of rules governing their smooth operation.

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