The 20% cut has come in way below market expectations as analysts were expecting at least a doubling of the proposed cut.
The proposal would not lead to a significant revival in the delivery-based volumes in the cash segment in which the new rate of STT of Rs 100 per Rs 1 lakh turnover will be applicable in 2012-13.
The Finance Minister also announced in his budgetary proposals that there would be an Income Tax deduction of 50% on investments of up to Rs. 50,000 in equity savings scheme named after Rajiv Gandhi.
The scheme will have lock-in period of three years. Whether the tax breaks provided will lure investors into the stock markets remains to be seen.
However, after the entire budgetary proposals the markets were not too enthused which lead to a decline in both the BSE and the NSE indices.