Following the recent budget announcement, the market sentiment in the Nifty Futures has shown signs of seller exhaustion. As observed in the hourly chart, the green color indicator highlights a current seller exhaustion phase, with higher odds of a pullback. This exhaustion touching the 3 standard deviation band signifies an oversold sentiment in the short term. Consequently, the odds of a pullback in Nifty Futures are heightened, suggesting a potential rebound.

The chart illustrates a period of declining prices, leading to an oversold condition. Such scenarios often indicate that the selling pressure might be overextended, paving the way for a reversal or a stabilization phase. Traders should keep an eye on these indicators as they can provide valuable insights into potential market movements and help in making informed trading decisions.
Budget 2024: Taxation Changes and Their Implications
The Budget 2024 brought significant changes to the taxation structure, impacting various segments of the financial market. Notably, there were no speculative taxes introduced for FNO (Futures and Options) trading, contrary to widespread anticipation. This has brought a sigh of relief to many traders and investors who were concerned about potential new taxes on speculative trading.
However, the budget did include notable changes in the taxation of capital gains, Securities Transaction Tax (STT), and personal income tax:
1. Short-Term Capital Gains (STCG):
• The tax rate for short-term capital gains has been increased from 15% to 20%. This increase impacts investors who sell assets held for less than a year, making short-term trading less attractive due to the higher tax burden.
• Short-term capital gains on certain assets will now attract a 20% tax rate, while all other financial and non-financial assets will be taxed at the applicable income tax rate.
2. Long-Term Capital Gains (LTCG):
• The tax rate for long-term capital gains has been increased from 10% to 12.5%. This change affects investors holding assets for more than a year, requiring them to pay a higher percentage of their gains as tax.
• Additionally, the limit for capital gains exemption has been hiked to ₹1.25 lakh per year.
3. Securities Transaction Tax (STT):
• The STT on futures has been increased from 0.0125% to 0.02%.
• The STT on options has been increased from 0.0625% to 0.10%.
Budget summary for us
— Nithin Kamath (@Nithin0dha) July 23, 2024
STT on options goes up from 0.062% to 0.1%. STT on futures goes up from 0.0125% to 0.02% from October 1st.
We collected about Rs 1500 crores of STT last year, @zerodhaonline. If the volumes don't drop, this will increase to about Rs 2500 crores at the new…
4. Holding Period Changes:
• The holding periods for determining capital gains have been simplified. For all listed securities, the holding period is now 12 months, and for all other assets, it is 24 months.
• This means units of listed business trusts will now be on par with listed equity shares at 12 months instead of the earlier 36 months. The holding period for bonds, debentures, and gold will reduce from 36 months to 24 months, while for unlisted shares and immovable property, it remains at 24 months.
5. Exemptions and Rationalization:
• The rate for long-term capital gains under various sections has been standardized to 12.5% for all categories of assets. Previously, this was 10% for STT-paid listed equity shares, units of equity-oriented funds, and business trusts under section 112A, and 20% with indexation for other assets under section 112.
• An exemption of gains up to ₹1.25 lakh (aggregate) is proposed for long-term capital gains under section 112A on STT-paid equity shares, units of equity-oriented funds, and business trusts, increasing the previously available exemption of up to ₹1 lakh.
• Unlisted debentures and unlisted bonds will continue to be taxed at the applicable rate, whether short-term or long-term.
The Memorandum of the Finance Bill 2024 highlights that the taxation of capital gains is being rationalized and simplified. These measures aim to ease the computation of capital gains for taxpayers and the tax administration by removing indexation for property, gold, and other unlisted assets.
6. Personal Income Tax:
Finance Minister Nirmala Sitharaman announced a revised tax rate structure under the new tax regime. The new slabs and rates are designed to provide relief and simplify the tax system for individuals. Here’s a breakdown of the revised tax rate structure:
• Income up to ₹3 lakh: No tax (0% tax rate)
• Income from ₹3 lakh to ₹7 lakh: 5% tax rate
• Income from ₹7 lakh to ₹10 lakh: 10% tax rate
• Income from ₹10 lakh to ₹12 lakh: 15% tax rate
• Income from ₹12 lakh to ₹15 lakh: 20% tax rate
• Income over ₹15 lakh: 30% tax rate
This progressive tax structure aims to reduce the tax burden on lower and middle-income earners while maintaining higher tax rates for higher income brackets.
The market sentiment post-budget shows a mixed reaction, with signs of short-term seller exhaustion in the Nifty Futures indicating potential pullback opportunities. On the taxation front, while the lack of new speculative taxes for FNO trading has been a relief, the increase in capital gains tax rates and STT, along with the revised personal income tax structure, marks a significant shift. Investors and traders must adapt to these changes, strategizing their investments to align with the new tax regime while capitalizing on market opportunities highlighted by technical indicators.