 "Realty indexation benefit gone, tax rate cut in Budget 2024. Stock strategy")
The Nifty Realty index tanked over 4 per cent to a low of 1,043.85 on the NSE in Tuesday's intra-day deals dragged by aggressive selling pressure in its constituents after Budget 2024 did away with indexation benefit on gains from real-estate resale.
The Finance Minister Nirmala Sitharaman in India's Budget for FY25 today proposed to withdraw the benefit of indexation for calculation of long-term capital gains (LTCG) in case of resale of house/ property. Further, the Union Budget 2024-25 also lower LTCG from 20 per cent to 12.5 per cent.
At 13:55 PM, the Nifty Realty index was down 3.7 per cent at 1,051. In comparison, the NSE benchmark, Nifty 50 index, was down 0.5 per cent at 24,390 levels.
Among individual shares, DLF dropped 5 per cent to Rs 791. Brigade Enterprises, Prestige Estates, Godrej Properties and Sunteck Realty declined over 4 per cent each. Lodha and Oberoi Realty were the other major losers.
"For individual taxpayers under the new tax regime, the increased standard deduction limit to Rs 75,000 from the previous Rs 50,000 along with the new income tax slabs implies savings - but hardly enough to boost housing demand," said Anuj Puri, Chairman - ANAROCK Group.
That said, for real estate transactions, bringing down the long-term capital gains tax from 20 per cent to 12.5 per cent, according to Amit Goyal, Managing Director, India Sotheby's International Realty is a welcome step, even if it comes with removal of indexation benefits. This, he believes, will encourage more liquidity in property transactions. Higher uniformity in long term capital gains tax across different asset classes was a long standing ask of investors.
"The push for digitization, efficient land management, and modernized bylaws is also a boost for urbanisation and real estate. This will improve ease of property transactions and strengthen municipal finances through increased property taxes," Goyal said.
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Meanhile, here's a quick technical outlook on the Nifty Realty and key real-estate stocks post the India's Budget 2024:
Nifty Realty
Current Level: 1,051
Downside Risk: 5.3%
Support: 1,007
Resistance: 1,070; 1,077
The Nifty Realty index has dipped below its 50-DMA (Daily Moving Average) for the first-time since June 04 intra-day fall. The index at presents quotes below the 50-DMA which stands at 1,070. The index had last closed below its 50-DMA on March 22, 2024.
The key momentum oscillators on the daily chart are indicating a weak bias, given the negative crossover on the 14-day RSI (Relative Strength Index), MACD (Moving Average Convergence-Divergence) and Slow Stochastic.
The near-term bias is likely to remain tepid as long as the index sustains below Rs 1,077. The index may seek support around its 20-WMA (Weekly Moving Average) at 1,007; below which near support is seen at 995 levels.
On the flip side, sustained trade above 1,077, can help revive the sentiment at the counter, and the index may bounce back towards its 20-DMA at 1,107.
DLF
Current Price: Rs 791
Downside Risk: 6.5%
Support: Rs 772; Rs 757
Resistance: Rs 860; Rs 875
DLF stock is seen testing support around its 200-DMA, which stands at Rs 772. The overall bias is likely to remain cautiously optimistic as long as the stock holds above the 200-DMA. Below which, the next key support levels for the stock stand at Rs 757 and Rs 740.
The upside for DLF stock seems to be capped around Rs 860 - Rs 875 owing to presence of multiple hurdles in this zone.
Godrej Properties
Current Price: Rs 3,139
Downside Risk: 11.1%
Support: Rs 3,070; Rs 3,015
Resistance: Rs 3,250
Godrej Properties stock is seen testing support around its super trend line which also coincides with the lower-end of the Bollinger Bands at Rs 3,070. Below which, the next near support for the stock is seen at Rs 3,015.
Break and sustained trade of the above levels, can trigger a steeper fall towards Rs 2,790 levels. On the upside, the 20-DMA at Rs 3,250 is likely to act as an immediate hurdle for the stock.