30 Jan 2025 — Nifty up 80pts, but still not bullish — PostMortem Analysis
Nifty Stance Neutral ➡
Nifty went up 80pts ~ 0.34% over the last week but not before some drama. From the chart below you can notice two horizontal lines
- resistance at 23357
- support at 22781
You may have also noticed how Nifty hit both these lines this week and reversed exactly from that zone. On Friday we hit the resistance and on Monday we hit the support, those two days would have wiped out decent capital of many professional trades, not because they were wrong, but because the options premiums were totally skewed.
What followed on Tuesday, Wednesday and today was consistent up moves despite FIIs turning up selling the markets relentlessly. Since we have the Union Budget on 1st Feb and since the markets will stay open, we might have another round of drama too.
What we really need is a cut in income tax and a hike in corporate taxes. The paradox is that the stock markets may not like it as most of them are more of a shareholder than an individual. If the income taxes are cut, then the consumption will pick up and all the consumer goods and FMCG industries will thrive. So will the capital goods and services sector. The only challenge is that there might be a 6 to 9 month delay for the transmission to happen.
If the corporate taxes are cut or we get some news on PLI schemes, tax incentives for businesses, SEZ zones etc, the stock markets will rally as people will load up on stocks.
My prediction for this budget is that — if the current government is really considerate and hears the pain of the lower middle class — they might end up slashing the income tax. Corporate taxes may be untouched.
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