Despite a drag from banks and other financial stocks on Sensex and Nifty due to a capital gains tax hike in the Budget, smallcaps and midcaps continued rallying unaffected by the Finance Bill changes. Sensex plummeted around 500 points, led by HDFC Bank, ICICI Bank, Axis Bank, and Bajaj twins with losses up to 3%. In contrast, the Nifty Smallcap250 index surged 1.4%, and the midcap index also rose around 1%. Microcaps saw even higher gains, rallying over 2%. While the increased tax rates for equities are a long-term negative, the hike’s magnitude remains marginal.
