Budget 2024 impact: Can Sensex dip to 76,000 post capital gains tax rejig?

In the worst-case scenario, the Sensex can slide to 75,800 levels, which is the 50 per cent retracement level from the June 4 Lok Sabha election outcome-day low, said Ajit Mishra of Religare Broking.

Equity market tumbled sharply in intra-day deals on Tuesday after the Finance Minister Nirmala Sitharaman announced a hike in long-term and short-term capital tax in the Union Budget 2024-25 presented in the Parliament on July 23.

Nirmala Sitharaman proposed to hike long-term capital gains (LTCG) tax from present 10 per cent to 12.5 per cent. The FM also hiked short-term capital gains (STCG) from present 15 per cent to 20 per cent.

On the other hand, Finance Minister Nirmala Sitharaman has also proposed to raise exemption on LTCG to Rs 1.25 lakh per year from Rs 1 lakh per year in her Budget 2024 tax proposals.

 

However, she has provided relief to lower salaried class, with increasing the income tax slab for the 5 per cent and 10 per cent income tax bracket by Rs 1 lakh each.

The S&P BSE Sensex dipped below the 80,000-mark to a low of 79,224 - and was down 1,542 points from the day's high of 80,766. The NSE Nifty 50 index plunged to a low of 24,074 in intra-day deals.

As of 12:45 PM; both the Sensex and Nifty had recouped some of the losses following the knee-jerk reaction to Budget tax proposals. The Sensex was down 550 points around 79,950 levels, and the Nifty was seen testing 24,300 levels.

Budget 2024 day market outlook

The markets reacted negatively to the capital gains tax rejig announcements given the sharp fall seen on July 23, the day Modi 3.0 Budget 2024 was presented in the Parliament. Analysts remain cautious on the road ahead for the markets in the short-term, but expect them to find their feet soon.

Here are the key levels analysts are keeping a tab on.

"It all depends on how the markets close today, July 23 on the Budget 2024 day. A breach of 24,200 levels can take the Nifty 50 down to 23,700 levels. A breach of this can take it further down to 23,500 levels, which is over 3 per cent lower from the current levels.", said Ajit Mishra, senior vice–president for research at Religare Broking.

Adding: “In case of the Sensex, this corresponds to a level of 78,400 to 78,500. That said, the index has support at 79,500 levels. In the worst-case scenario, it can slip to 75,800 levels, which is the 50 per cent retracement level from the June 4 Lok Sabha election outcome-day low.”

Key Sensex, Nifty levels to be tracked:

Sensex

Support: 79,940; 78,100; 75,875

Resistance: 81,755

Roughly two weeks ago, the BSE Sensex registered an all-time high at 81,587.76 on July 12, 2023. Incidentally, the high of the Sensex is precisely below a key resistance on the yearly Fibonacci chart, which stands at 81,755.

As per the retracement analysis, the BSE Sensex may dip towards the earlier resistance points, which may now act as supports placed at 79,940, 78,100 and 75,875. The latter is a key level for the remainder of the calendar year 2024. On the upside, the Sensex will need to clear the hurdle at 81,755 in order to scale newer heights.

On the flip side, the support at 75,875 holds the key for the remainder of the year. As long as this support is held, the Sensex may gyrate in the 75,875 - 81,755 zone. However, break and sustained trade below the support level can trigger a slide towards 72,000-mark.

Nifty

Support: 24,300; 24,100

Resistance: 24,800

Amid the intra-day dip, the NSE Nifty 50 dipped below its 20-DMA (Daily Moving Average) which stands at 24,300. The index, however, sought support around its super trend line support at 24,100 levels.

The key momentum oscillators are clearly in favour of further downside. Hence, the upside for now seems capped around 24,800 levels.

On the downside, break and sustained trade below 24,100 level, can trigger a fall towards its 50-DMA, which stands at 23,460 levels or all-the-way towards the 100-DMA at 22,880 levels.