There was a starting hiccup in the market today with markets opening gap down due to Nasdaq getting trashed last night. Big stocks like Tesla, Broadcom, AMD, and Nvidia took significant hits. Today’s main story is the real estate tech shocker, and we’ll delve into the fine print towards the end of this blog
Yesterday, SEBI came out with a report that 70% of the cash players in intraday markets are losing money. They have done research on data from 2019 to 2023. This comes on the back of the previous research report on FNO players, which showed almost 89% of them lose money. So, 89% of FNO people are losing money, and 70% of intraday folks are losing money. I don’t know what people are doing. It is so simple to make money in the Indian markets, provided you don’t do anything stupid.
These 89% in FNO and 70% in the intraday segment can’t understand the simple fact that without using your brain, you could have made good double-digit returns. But the fertile brains are made to believe that you will make hundreds of percent of return every year and 20-30% every month, so you fall into the trap of intraday or FNO trading.
There is nothing wrong with trading. I am not saying trading is bad. I have done trading for almost a decade in my earlier, younger self. But you have to do it professionally. You can’t be doing a twelve-hour hectic job with a boss on your head and, on the side, doing some trades. It doesn’t work that way. It’s a full-time occupation. A lot of folks are attracted by their friends telling them that they’ve made so much money in the last few months. Don’t get fooled by all that. It’s a proper profession to follow, and it takes years and years for you to come to a point where you can feel confident that you can make money in any kind of market.
Market Overview
Where is the market headed? The market is signaling strongly that it doesn’t want to go down. Despite a gap-down opening of nearly 200 points, it rebounded from 24,210 back to 24,446, a 200-point gain throughout the day. There was no opportunity for intraday shorting, catching bears on the wrong foot once again.
Nifty Next 50
Nifty Junior again took a very good support at the 40 SMA. Unless something really gets revealed either about fine print in the budget or something else, there is nothing currently that looks like it can topple this market, except very poor results, which I think are already largely discounted.
Even today, a couple of companies came out with disastrous results, like Laurus Labs for instance. The stock didn’t fall at all. The market is expecting bad news, and yet, whenever bad news is delivered, it absorbs and goes up. The same thing has happened with the budget and the capital gains tax increases. Long-term capital gains up 25%, short-term capital gains up 33%, FNO taxes up 60%, and yet the market doesn’t want to fall.
This is exactly what you should be grasping from the market: the liquidity is not allowing the markets to fall. There will need to be a big event, a change of stance, or something else that will really break this. I don’t see that happening on the horizon, at least not today.
Nifty Mid and Small Cap
Mid caps were down only a quarter of a percent. They did not open very far gap down, almost within the candle of yesterday. Small caps also had an inside day, not going down much, only 0.208%. It’s almost like we are looking for the next trigger.
Nifty Bank Overview
Banks continue to fall, but as I mentioned yesterday, the fall looks almost done. Today, they opened very near yesterday’s low and closed there. Down 0.83% on a closing basis, but not viciously falling. It is just a correction, like we had earlier corrections.
Nifty Heatmap
Heat maps today show that in the Nifty heat map, Axis Bank was trashed -5%, ICICI Bank -2%. Most of the FII selling is concentrated there as they have big allocations to these stocks. Kotak Bank, SBI Life, HDFC Life, and HDFC Bank were up. ONGC raced up 5%, Tata Motors 6%, Sun Pharma, and L&T also up nicely. Nestle reported a 1% volume growth, and the stock is down just 2%, sitting at 80-90 times price earnings with 1% volume growth.
Titan was down 2%, ITC down almost 1%, Tata Steel down 2%, JSW down 1%, Reliance flat, TCS, and Infosys also flat. In the Nifty next 50 space, railway stocks were hit today. IRFC, RailTel, RVNL were all down. Adani Green, United Spirits were up 4.4%. Varun Beverages has been going up every day, Havells, Bosch, Marico going up. IOC went up dramatically by 4.7%. Tata Power and Adani Power were up marginally. IRFC, Geo Finance, DLF, Chola Finance, and Jindal Steel were losing.
Sectoral Overview
Sectoral trends show not big moves, but metals losing some ground today, -1.3%, losing 5% this week and 7% in the last month. This is not a good situation. Commodities, on the other hand, are up 2.6%, gaining half a percent. Private banks down, real estate down 0.8%, PSU banks down and flat -0.6%, pharma doing all right, +0.9%. Public sector enterprise stocks maintaining gains, up 6.3% in the last month. Autos up 1.3%, energy stocks also 1.3%.
Energy, auto, public sector enterprise stocks have all done well in the last week, not falling much. Pharma has done the best among all sectors over the last three months. PSU banks and metals are the only sore points. Otherwise, we’ve had a fantastic move in three months in IT, public sector enterprise stocks, auto stocks, and FMCG stocks.
Sectors of the Day
Nifty Auto Index
Autos also up 1.2%. We are coming close to the end of the month, so the numbers at the end of the month will be important. There’s a lot of talk about piled-up inventory in the auto space, which we’ll know more about on 1 August.
Nifty Oil and Gas Index
The oil and gas index continues to be the favorite, now climbing very close to its previous all-time high, may challenge this high in a few days, up 2.2% even when the rest of the market was weak.
Stocks of the Day
MMTC
MMTC continues to baffle investors. Yesterday it went from 84 to 100, and today it went up from 100 to 121. Massive, almost 40% gain in two sessions. On the long term, MMTC is doing a twelve or thirteen-year high. Maybe it has to do with the gold duties, which may have a promising demand pull because of the lower import duties. There’s a strong rumor that the GST on gold may go up from 3% to 12% in the next GST meet. If that happens, gold investing or buying in India will go dead.
Story of the Day : The Real Estate Shocker
Now, let’s discuss the real estate tax shocker. The income tax department’s claim that nominal real estate returns are between 12% and 16% seems unrealistic. In reality, real estate investments rarely achieve these returns, and the removal of indexation for inflation further complicates the situation. Various calculators have emerged online showing that the new tax regime is beneficial only if property values have increased significantly.
Moreover, a hidden provision excludes stamp duty from the base price for long-term capital gain calculations, effectively increasing the tax rate from 12.5% to 13.62%. This opaque approach raises concerns about transparency and fairness.
Given the data, it’s clear that the government’s assumptions about real estate returns are flawed. They need to reconsider the real returns and recalibrate the long-term capital gains tax accordingly. Despite potential benefits like simplification and reduced cash components in real estate transactions, the current approach needs refinement for fairness and accuracy.
