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Nifty and Sensex recovered from diving sharply during the FM's speech to end flat. Midcaps (-0.6%) and SmallCaps (0.9%) were not lucky, though. The advance-decline ratio was in favor of the bears (3:2).
Most sectors ended in the red. FMCG (+2.8%) was the top gainer, while auto (+0.3%) saw minor gains. Meanwhile, real estate (-2.3%) PSU banks (-1.4%), and Metals (-0.9%) took a beating.
STCG, LTCG, and STT have all been hiked. Read our top story on the new changes and what it means for markets in the days ahead.
Titan, ITC, and IRCON saw big movements today after GOI's budget. Check out their charts below to find out why.
Federal bank (+3%) was in focus after appointing KVS MANIAN as its new CEO.
MapMyindia (+9%) and Genesys international (+10%) after the FM announced that land records would be digitized with the help of GIS mapping.
Dixon Technologies fell -4% after the GOI announced that it would cut import duties on mobile phones.
Result Reaction
2) ITC jumped +7% after it became clear the budget would have no increase in cigarette taxes. This is in line with the GOI's thinking on boosting consumption and ensuring a stable tax regime. No harm no foul.
Supreme Industries was down -3% after its Q1 profit missed estimates, Nuvama also downgraded the stock.
Suzlon was locked in a +5% upper circuit after its Q1 profit soared +200% YoY.
Budget 2024: Key Takeaways
Taxes, taxes, and taxes. If there's one word that sums up this union budget, it's taxes. There is a lot to digest here, so buckle up.
Firstly, the most important stuff. Short-term capital gains tax has been hiked from 15% to 20%. Long-term capital gains tax was also increased from 10% to 12.5%. These sound small but the LTCG hike is a nearly 25% jump, which is insane. Yes, LTCG tax exemption limit has been raised to Rs. 1.25 lakh vs 1 lakh Rs. earlier, but overall, you will be paying more in taxes on your profit. Then there is the hiking of Securities Transaction Tax (STT) rates on Futures & options.
STT is now 0.1% of the option premium vs 0.06% earlier, while futures are 0.02% vs 0.01% earlier. Classic GOI, trying to kill the F&O party as best it can. Lastly, indexation benefits on the sale of the property have been removed, but the LTCG has been reduced from 20% to 12.5%. This is complex AF, but it will hurt some people with relatively lower returns and ancestral property and benefit some higher returns & recent/new purchase.
BIG PICTURE: There is no other way to describe it. The GOI is jealous of the bull market and feels it deserves a share of profits. Yes, it's mostly about raising revenue, but there are darker concerns. Over the last week, we have seen the RBI, SEBI and even the chief economic advisor wring their hands and worry about how too much money is going into stocks and MFs.
This is money, they feel, that should have been going into fixed deposits to boost bank lending. Don't buy into this logic --- the way to go about this is to make FDs more competitive by raising deposit rates and not by increasing taxes on equities.
There is a good argument to be made for curbing F&O activity, which is why raising STT is a decent idea. But it can't be compared to far more safe ways of long-term wealth creation like mutual funds.
Higher STCG and LTCG suck. We will have to see how it works out in the long term, especially with reduced F&O activity and whatever happens to real estate sales.
Chartbusters
1) TITAN was the top Nifty gainer after the GOI announced a big cut in custom duty on gold & silver from 15% to 6%. Yes, jewelry firms may see a short-term inventory hit. Ultimately this will reduce the prices of gold and boost the organized sector. A double win for Titan and other players!
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| TITAN SHARE CHART |
2) ITC jumped +7% after it became clear the budget would have no increase in cigarette taxes. This is in line with the GOI's thinking on boosting consumption and ensuring a stable tax regime. No harm no foul.
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| ITC SHARE CHART |
3) IRCON was the top loser on the NSE 500. Railway stocks in general were under pressure after the budget announcement lacked any mention of it. There were zero mention of trains in the union budget. This does not indicate the GOI is going to invest less, but investors panic-reacted along with all the negative news flow on higher taxes.
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| IRCON SHARE CHART |
Here are the closing points
| NIFTY | 24479 | -0.1% |
| SENSEX | 80429 | -0.1% |
| BANK NIFTY | 51778 | -1% |
