Indexation removed - Understanding the impact | Intra day trading | CA Rachana Ranade

Introduction

Introduction

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Hello everyone and welcome to another Thursday live stream! Today we're going to dive into some essential topics including the recent SEBI report on intraday trading, the removal of indexation benefit as discussed in the recent budget, and a quick technical analysis of some stocks. Let's get started!

SEBI Report on Intraday Trading

Recently, SEBI released a report indicating that seven out of ten individual intraday traders in the equity cash segment are making losses. This surge in intraday traders constitutes a 300% increase from the pre-COVID period. However, 76% of young traders aged below 30 years are losing money, demonstrating the risks involved.

Key Stats:

• 70% of intraday equity traders made losses in FY 2022-23.
• 300% surge in individual traders post-COVID.
• 76% of traders below 30 years of age incurred losses.

Market Analysis Post Budget

Impact of the Budget

It’s typical for the government to introduce tough measures in the first year of their tenure. This time, changes such as the increase in STCG from 15% to 20% and LTCG from 10% to 12.5% were introduced. Despite these adjustments, the general sentiment remains cautiously optimistic among retail investors and domestic institutional investors.

Nifty Levels

Even with heavy FII selling, the Nifty has shown resilience. The critical resistance level I'm looking at is around 24,500. Closing above this could offer a more promising outlook. Until then, the markets remain somewhat in a cautious state.

Understanding Indexation Removal

The government has advocated that the new tax rate without indexation is beneficial in most cases. However, this largely applies when real estate appreciates significantly over periods such as five, ten, or fifteen years. For areas where property appreciation is below 9-11%, the previous tax regimen might have been more favorable.

Illustrative Data:

• Property appreciation of 1.7x in 5 years, 2.4x in 10 years, and 4.9x in 15 years.
• Older tax rates more beneficial only where returns are below 9-11%.

Stock Analysis Section

Natco Pharma

Displayed a potential rounding bottom breakout and is trading with lower P/E compared to peers.

CDSL

Flag and pole breakout was indicated on the charts.

Suzlon

Had a notable quarterly performance improvement and is interesting to watch for future movements.

Biocon, Campus, Cams

Individual stocks demonstrated various technical patterns worth watching for potential breakout opportunities.

Key Takeaways

Despite some tough measures introduced in the recent budget concerning taxes, the sentiment towards long-term investing in Indian equities remains positive. On the technical front, several stocks have shown promising patterns, reinforcing the idea of diligent assessment before making investment decisions.

Keywords

• Stock Market
• SEBI Report
• Intraday Trading
• Indexation Removal
• Budget Impact
• Nifty Levels
• Technical Analysis
• Long-Term Investing
• Real Estate Appreciation
• Tax Rate

FAQs

1. What was the SEBI report about intraday trading?

• SEBI's report highlighted that 70% of intraday traders in the equity cash segment made losses in FY 2022-23, with a 300% surge in individual participation post-COVID.

2. What changes were introduced in the recent budget?

• The budget included increases in STCG from 15% to 20% and LTCG from 10% to 12.5%, amongst other measures.

3. What is indexation removal, and how does it impact taxes?

• Indexation removal implies that capital gains will no longer be adjusted for inflation. It is beneficial only if property appreciation is significant over periods such as ten or fifteen years.

4. What are critical Nifty levels to watch?

• The critical level for Nifty is around 24,500. Closing above this could indicate a more positive market outlook.

5. How have individual stocks performed recently?

• Stocks like Natco Pharma, CDSL, Suzlon, and others have shown promising technical patterns worth monitoring for potential gains.

6. Why are tough budget measures introduced in the first year?

• Typically, tough measures are taken in the first year of government tenure as memories tend to be short-term, minimizing the political risk closer to election years.