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Below is the Views on Post Budget Reaction By Mr. Amit Gupta, CO-Founder and CEO, TradingBells
Market structure is very weak where it was vulnerable to fall on weak global cues while there was only hope that out of the box budget could reverse the direction of the market but the budget was in line expectations with disappointing on LTCG front. The rationalization of DDT is the only cheerful factor for some high dividend-paying companies like IT companies. There were no major steps that could boost economic sentiments immediately. The market is taking budget as a non-event and continuing its downfall in tandem with a fall in the global market amid worries of Coronavirus.
Some cut in income tax was already expected which cause some immediate positive reaction in some consumption stock but then they witness sell off at higher levels. The cut in income tax comes with a rider of giving up exemptions which are also one the reason for disappointment, especially life insurance stocks fell sharply because it is expected that those forgoing exemptions to move to lower tax regimes may not take life insurance.
In terms of other positive developments, insurance guarantee on deposit raised to 5 lakh from 1 lakh and FPI limit in bond market raised to 15% from 9% are meaningful.
The government is going to sell a stake in IDBI bank which was taken positively by the stock market and the government will sell part of LIC through its listing in the stock market which is also a positive trigger for the market.
Technically, Nifty has corrected significantly where it is trading near critical support of 11700 which coincides with its 200-DMA of 11655 where we can expect a pullback from here if the worries of coronavirus ease otherwise the downward journey will continue with some time consolidation. In the upside 11925-12000 zone will act as an immediate and strong supply zone.
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