- The Daily Rip India by Stocktwits
- Posts
- Tax, Tax and More Tax!🚨🚨🚨
Tax, Tax and More Tax!🚨🚨🚨
Yash Upadhyaya
July 23, 2024
Tale of the Tape
Good evening everyone.
Nifty and Sensex recovered after diving sharply during the FM’s speech to end flat. Midcaps (-0.6%) and Smallcaps (-0.9%) weren’t that lucky though. The advance-decline ratio was in favour 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 all saw BIG movements today after the 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 digitised with the help of GIS mapping.
Dixon Technologies fell -4% after the GOI announced that it would cut import duties on mobile phones.
Results reaction. Supreme Industries was down -3% after its Q1 profit missed estimates; Nuvama also downgraded the stock. Meanwhile, Suzlon was locked in a +5% upper circuit after its Q1 profit soared +200% YoY.
Here are the closing prints:
Nifty | 24,479 | -0.1% |
Sensex | 80,429 | -0.1% |
Bank Nifty | 51,778 | -1% |
Budget
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, the LTCG tax exemption limit has been raised to Rs 1.25 lakh vs Rs 1 lakh earlier, but overall, you will be paying more in taxes on your profits. Yikes. Then there’s the hiking of securities transaction tax (STT) rates on futures & options. FYI - STT is now 0.1% of 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 property has 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 purchases).
Big Picture: There’s no other way to describe it. The GOI is jealous of the bull market and feels it deserves a share of the profits. Yes, it’s mostly about raising revenue, but there are darker concerns. Over the last week, we’ve 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.
TL;DR: Higher STCG and LTCG sucks. We’ll have to see how this works out in the long term, especially with reduced F&O activity and whatever happens to real estate sales. Buckle in, we’re in for a wild ride. PS - the only saving grace was that it looks like everyone bought the dip today!
What’s your take on the budget? |
Specials
Budget 2024 Stock Picks - By SEBI RA
The Final Budget is around the corner! What to expect from the budget announcement and how should you position yourself to make the most of it? In our latest video, we cover 5 stocks ideas by SEBI RAs which can deliver healthy upside from current levels.
Charts
Chartbusters
Here are three companies that saw big movements today!
1) Titan was the top Nifty gainer after the GOI announced a big cut in customs duty on gold & silver from 15% to 6%. Yes, listed jewelry firms may see a short-term inventory hit. But ultimately this will reduce prices of gold AND boost the organized sector. A double win for Titan and other players!
2) ITC jumped +7% after it became clear the Budget would have NO increase in cigarette taxes. FYI - this is in line with the GOI’s thinking on boosting consumption and ensuring a stable tax regime. No harm no foul.
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. Fun fact: there were ZERO mentions of ‘trains’ in the Union Budget. This doesn’t indicate the GOI is going to invest less, but investors panic reacted along with all the negative newsflow on higher taxes.
Check out their charts below:
Links That Don’t Suck
Get In Touch
Have feedback on The Daily Rip India? Let me know using the poll below or email me (Yash Upadhyaya) at [email protected]!
How did you like today's newsletter? |
Want to sponsor this newsletter and reach hundreds of thousands of passionate investors and traders? Reach us here.
Disclaimer: Content, news, research, tools, and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. Read the full terms & conditions here.
