From High Hopes to Flatline: How Did the LTCG Tax Hike Impact Today’s Market?

At the close, the Nifty 50 was at 24,479.05 down by 0.12%

Today, the NSE Nifty 50 opened in the red, down by 0.12%, and closed at 24,479.05, below the crucial 24,500 mark. The Union Budget volatility made it an exceptionally busy day, with the National Stock Exchange (NSE) recording 25.97 crore trades in a single day—a world record!

The benchmark indices, Sensex and Nifty, ended marginally lower as the government proposed a hike in the Securities Transaction Tax (STT) on futures and options in the 2024-25 budget. This marked the third consecutive session of decline for Indian equity indices on July 23.

Despite positive global cues, Indian indices erased early gains and traded flat during the first half. Profit booking in the second half dragged Nifty below 24,100 after the Finance Minister announced a hike in the Long-Term Capital Gains Tax (LTCG) from 10% to 12.5%. However, last-hour buying helped Nifty recover over 400 points from the day’s low, ending with moderate weakness and reduced volatility.

The Union Budget met analysts’ expectations, maintaining fiscal consolidation despite coalition pressures. Yet, the increase in LTCG, Short-Term Capital Gains (STCG), and STT rates was perceived negatively.

Although the short-term trend for Nifty remains bearish with high volatility, the emergence of sharp buying and a positive candle pattern on the daily chart signal a potential bullish reversal in the coming sessions. The Relative Strength Index (RSI) emerging from the overbought zone with a bearish crossover further adds to the intrigue.

With heightened volatility, consumer stocks led gains following the government’s financial assistance announcement, supporting overall market sentiment. As traders adjust their positions post-budget, one question lingers: Will Nifty overcome these challenges and rally, or is more turbulence ahead for investors?

Budget 2024: A Game-Changer or Just More of the Same?

Historic Day on Dalal Street: The National Stock Exchange (NSE) recorded a staggering 25.97 crore trades in a single day, setting a world record.

Massive Infrastructure Boost: The government has earmarked an impressive Rs 11.11 lakh crore for infrastructure, which is 3.4% of GDP. An additional Rs 1.5 lakh crore in interest-free loans to States promises to invigorate the sector.

Strategic Investments: Emphasis has been placed on enhancing road and airport infrastructure, as well as developing 12 industrial parks across over 100 cities.

Climate Action: With a focus on sustainability, the budget introduces fiscal incentives for rooftop solar installations and pumped storage, alongside tax breaks for renewable energy and critical minerals like lithium and copper.

Fiscal Prudence: The government is targeting a reduced fiscal deficit of 4.9%—a 0.7% improvement from the interim Budget’s 5.1%.

Job Creation and Skills Development: The budget maintains its commitment to quality spending with a keen focus on job creation and skills development without compromising the capital expenditure announced earlier.

Housing for All: An additional 3 crore homes under PMAY and a Rs 10-lakh crore outlay for urban housing under PMAY 2.0 aim to boost affordable housing. Changes in stamp duty rates are set to enhance housing demand.

But here’s the question: Will these ambitious plans truly transform the economic landscape, or are we merely witnessing the same old promises dressed in a new budgetary guise?

Bank Nifty: Down by 0.96%

The Bank Nifty and BSE Sensex both ended the day in the red, reflecting a challenging market environment. The Bank Nifty opened down by 0.96% and closed at 51,778.30, highlighting a rough day for banking stocks. Similarly, the BSE Sensex, which had been under pressure throughout the day, settled at 80,429.04, down by 0.09%.

In the sectorial front, the FMCG sector surged impressively by 2.68%. Within this dynamic sector, ITC Ltd. soared, achieving a remarkable 6.52% increase. Following closely, Tata Consumer Products Ltd. experienced a solid gain of 4.42%, further driving the sector’s upward momentum. These gains highlight the resilience and strength of FMCG in today’s market.

On the flip side, the Media sector faced significant challenges, emerging as the top loser with a decline of 2.29%. Within this struggling sector, Sunteck Realty Ltd. saw a steep drop of -4.55%, and Macrotech Developers Ltd. followed with a loss of -3.82%.

Foreign Institutional Investors (FIIs) recorded a net selling value of Rs. 2,975.31 crore. Their buying value stood at Rs. 14,330.77 crore, while their selling value reached Rs. 17,306.08 crore.

In contrast, Domestic Institutional Investors (DIIs) displayed a more optimistic stance. They posted a net buying value of Rs. 1,418.82 crore. Their buy transactions totaled Rs. 17,799.44 crore, with sales amounting to Rs. 16,380.62 crore

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included Federal Bank with a 2.73% increase, Kotak Bank with a 0.54% increase, and AU Bank with a 0.08% increase.

On the other hand, the biggest losers in the sector included HDFC Bank with a 1.58% decline, IDFC First Bank with a 1.50% decline, State Bank of India with a 1.44% decline, Axis Bank with a 1.43% decline, and ICICI Bank with a 1.14% decline. These results suggest that some of the banking stocks not performed better for the day.

Gold and Silver

Today 22 Carat Gold Price Per Gram in India (INR)

Today 24 Carat Gold Price Per Gram in India (INR)

Today Silver Price 1 Gram/KG in India (INR)

Stocks Highlights

Titan vs. L&T: Which Stock Should You Bet On?

Titan Company Ltd. witnessed a remarkable upswing, with its share price soaring by 6.56% from its previous close of Rs 3,254.45, reaching Rs 3,468.00. Over the past 19 years, only 2.09% of trading sessions saw intraday declines exceeding 5%, highlighting its resilience.

Titan’s return on equity (ROE) outperformed its five-year average, delivering an impressive 37.21% for the year ending 31 March 2024, compared to an average of 25.48%. Additionally, the company allocated 1.21% of its operating revenues to interest expenses and 3.65% to employee costs. Over three years, Titan’s stock returns were 88.04%, far surpassing the Nifty 100’s 52.57%.

In contrast, Larsen & Toubro Ltd. (L&T) saw its share price dip by 3.00%, closing at Rs 3,542.00 from a previous Rs 3,651.45. However, L&T’s annual revenue growth of 20.94% outperformed its three-year CAGR of 17.16%.

Moreover, a bullish 20-day moving crossover signal appeared recently, historically leading to an average price gain of 2.8% within seven days. L&T’s three-year stock return stood at a robust 140.34%, significantly higher than the Nifty 100’s 52.57%.

Advance Decline Ratio

Today, the advance-decline ratio was 0.67, and the market breadth was negative. The volatility index India Vix decreased by 17.42 to settle at 12.75 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 1061
Decliners – 1592
52Wk High – 85
52Wk Low – 41
High Band Hitters – 103
Low Band Hitters – 150
200d SMA – 21790
50d SMA – 23451
20d SMA – 24312

Top Gainers and Losers Stocks

The top gainers were Titan (+6.56%), ITC (+6.52%), Tata Consumer (+4.42%), NTPC (+2.78%), and Adani Ports (+2.77%).

The top losers were Larsen & Toubro (-3.00%), Hindalco (-2.97%), Shriram Finance (-2.79%), Bajaj Finance (-2.27%), and ONGC (-1.84%).

Top Gainers and Losers Sectors

The top gainers sector were FMCG (+2.68%), Consumer Durables (+2.11%), Media (+1.16%), IT (+0.68%), and Pharma (+0.55%).

The top losers sector were Realty (-2.29%), Financial Services (-1.37%), Oil & Gas (-1.20%), and Metal (-0.94%).

SECTORS – NOTABLE ACTION
FMCG +2.68%
CONSUMER DURABLES +2.11%
MEDIA +1.16%
REALTY -2.29%
FINANCIAL SERVICES -1.37%
OIL & GAS -1.20%

Stocks Ban List

(SEBI) F&O ban list (INDIACEM open at +355.00 and close at -350.55), (GNFC open at +687.00 and close at -662.25), (CHAMBLFERT open at +510.90 and close at -486.15), (SAIL open at +143.90 and close at -141.39), (BANDHANBNK open at +197.30 and close at -195.52), (PEL open at +937.10 and close at -931.00), and (HAL open at +5045.00 and close at -4856.10) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

IDEA, IDFCFIRSTB, LTF, NMDC, BIOCON, ABFRL, INDUSTOWER, IEX, and IRCTC stocks has the possibilities of entrance in the ban list.

BANDHANBNK, PEL, and HAL stocks has the possibilities of exit from ban list.

Daily Pivots

As per the above pivots data, 24100 to 24750 is the Nifty 50 trading range.

Read Previous -Daily Insights- here
Global Shifts and Market Volatility—How Will Nifty React to the Union Budget?
Will Global Weakness and Profit Booking Derail Dalal Street Before the Union Budget?
How Did Indian Indices Overcome Weak Global Cues to Reach New Peaks?

This article is only for educational purposes and is not an investment advice.