The Indian benchmark indices retained trend of closing the July Budget Day in red for the fifth consecutive time. Sensex and Nifty 50 were down about 0.1 per cent each. The Nifty Bank index was down about a per cent. Indeed, all three indices witnessed an intraday fall of over 1.5 per cent before recovering some of the loss in the second half of the day.
Increase in short-term and long-term capital gains tax and rising the security transaction tax (STT) for the Futures & Options (F&O) segment were the major triggers for the intraday fall.
Among the sectors, the BSE Realty index was beaten down the most. Removal of indexation while calculating the long-term capital gains tax for assets such as real estate knocked down this sector index.
As the markets have recovered from their intraday lows, we take a look the charts to see what is in store for the benchmark indices, going forward.
Nifty 50: Support holds
The bounce from the low of 24,074.20 on Tuesday is very significant. This has happened from the 24,100-24,000 support zone. If a strong follow-through rise happens in the next couple of days, that could be positive for the Nifty (24,479). A rise above 24,650 from here will be bullish; it is likely to see 24,850 in the short term. A further break above 24,850 will see the Nifty rising towards 25,000-25,150 eventually.
Nifty will now need a decisive break below 24,000 to come under pressure. Only in that case, the risk of seeing a sharp correction towards 23,500 and lower levels will come into the picture.
Nifty Bank: Room to fall
The short-term outlook for Nifty Bank (51,778) index is relatively weaker than Nifty. The index has been struggling to breach the 52,800-53,000 resistance zone over the last two weeks. This coupled with the fall below 52,000 on Tuesday leaves the bias negative.
Support is around 51,000. But the chances are looking high for the Nifty Bank index to break this support and fall to 50,500 – the next important support. The price action, there after, will need a close watch. A strong bounce from around 50,500 may have the potential to take the Nifty Bank index up to 53,000 again.
For the outlook to turn bullish again, the index has to surpass 53,000 decisively. Only then the doors will open for a rally to 54,000-54,500.
Realty stocks to watch
Realty stocks were knocked down after the removal of indexation in the long-term capital gains tax calculation. After the fall on Tuesday, a few of the stocks in the Realty index are now poised at very crucial levels. The price action on these stocks will need a close watch in the coming days.
Sobha (₹1,774) has crucial supports at ₹1,740 and ₹1,700. A break below ₹1,700 will be bearish; the share price is likely to see ₹1,500 on the downside. A strong bounce from around ₹1,700 is needed to keep the uptrend intact and rise back above ₹2,000 levels again.
Prestige Estate Projects (₹1,762) has support at ₹1,650. It has to sustain above this support and rise back, in which case it may see ₹2,200 on the upside.
DLF (₹809) has to sustain above ₹760 to rise back to ₹1,000-levels and retain the uptrend. A break below ₹760 will increase the risk of the stock tumbling towards ₹600.
Brigade Enterprises and Macrotech Developers are looking much weaker among the lot. Brigade Enterprises (₹1,204) can fall to ₹1,100. Macrotech Developers (₹1,370), on the other hand, can see ₹1,300-1,250 on the downside from here.