Budget 2024: Consolidation or rally – where is Nifty headed now? Technical experts answer

Budget 2024: Following the Budget 2024 presentation on Tuesday, July 23, the Indian market closed slightly negative, marking a movement of less than one percent for the third consecutive budget day session. The day saw significant volatility as investors reacted to the budget announcements, particularly the changes in capital gains tax. The market was evidently shocked as participants digested these changes.

Despite a massive intra-day decline, the Indian market recovered to end on a flat note. The Sensex dropped 73 points to close at 80,429.04, while the Nifty lost 30 points, settling at 24,479.05. Earlier in the day, the Sensex had plunged 1,204.72 points to a low of 79,224.32, and the Nifty had crashed 405 points to 24,074.2.

The seventh budget presented by Finance Minister Nirmala Sitharaman focused on job creation, rural development, women empowerment, and changes to the new income tax regime and capital gains taxes. Key changes included doubling the STT rate on equity and index trades, increasing the Long Term Capital Gains (LTCG) tax from 10 percent to 12.5 percent, and raising the Short Term Capital Gains (STCG) tax from 15 percent to 20 percent. Additionally, the income received from share buybacks will now be taxed in the hands of the recipient, a departure from the previous exemption.

The budget also set a reduced Fiscal Deficit target for FY25 at 4.9 percent of GDP, down from the 5.1 percent announced in the Interim Budget. The FY25 capital expenditure target was maintained at ₹11.1 lakh crore, emphasising the government's commitment to robust capital spending.

Following the Budget 2024 announcement and subsequent market volatility, technical experts have weighed in on where they see Nifty heading in the near term, identifying critical support and resistance levels. Here's a detailed look at their perspectives.

Most experts expect Nifty to trade around 23,640-25,000 in the short term.

Aditya Agarwal, Head of Derivatives & Technical at Sanctum Wealth

We expect that markets will consolidate post budget and will continue to see profit booking pressure at higher levels. Overall medium to long term trend for Nifty remains bullish however from short term perspective 24,800-25,000 band will act as stiff resistance zone and a move towards those levels will be used by traders to book profit in long positions. Similarly on lower side, 24,100-24,000 will prove as strong support zone for index. Only a close below 24,000 will change short term view on Nifty and in that scenario, we can expect index to move towards 23,700-23,400 levels. We remain bullish on FMCG, Pharma and Technology sectors and expect them to outperform broader indices in short to medium term perspective.

Santosh Meena, Head of Research, Swastika Investmart Ltd.

We should closely monitor the Nifty's key support level at 24,150. If Nifty manages to hold above this level despite the budget's negative implications, it could resume its bullish momentum and target the 25,000 level. Conversely, if Nifty falls below 24,150, it may decline further towards the 23,640 level.

Mehul Kothari, DVP - Technical Research, Anand Rathi Shares and Stock Brokers

The much-awaited Budget 2024 has been released, but it has not impressed investors on Dalal Street, as evidenced by the significant decline in the Nifty index. The Nifty fell nearly 500 points from a high of 24,600 to an intraday low of 24,074 post budget. From a technical perspective, the Nifty formed a bearish engulfing pattern on July 19, 2024, just before the budget announcement. This pattern indicated that investors were uncomfortable at higher levels, leading to substantial selling pressure. Currently, the Nifty has tested its 21-day exponential moving average (DEMA), which served as a support zone. Moving forward, support is expected near 24,000, followed by 23,800, while resistance is anticipated near 24,800 and 25,000.

The Relative Strength Index (RSI) on the daily chart is currently around 62, down from 70 the previous day, signaling a loss of momentum at higher levels. Additionally, the Foreign Institutional Investors (FII) long-short ratio, which peaked at 84% in July 2024, is now at 77%. This FII long-short ratio on a higher side could be a negative indicator for the market's future performance. A further reduction in this ratio might adversely affect the overall market sentiment.

Given these technical indicators and market conditions, traders and investors are advised to avoid aggressive long positions and wait for a more substantial market correction.

Trivesh D, COO of Tradejini

From a technical perspective, the post-budget market is often characterised by volatility. Traders can utilise moving averages to identify support and resistance levels, providing a clearer picture of market sentiment and potential entry or exit points.

For stocks related to infrastructure and MSMEs, it is important to watch for moving average crossovers and RSI (Relative Strength Index) levels to identify overbought or oversold conditions. These indicators can help traders make informed decisions on when to enter or exit positions.

Additionally, sectors benefiting from reduced customs duties on gold, silver, and mobile phones may experience increased activity. Monitoring these sectors for bullish patterns or breakouts can present short-term trading opportunities. Implementing stop-loss strategies is crucial in managing risk, especially in the current market environment.

Lastly, it is important to be cautious about PSU stocks due to the impact of disinvestment initiatives. Monitoring these stocks for any signs of recovery or further downturns can help traders make better-informed decisions.

As the market digests the Budget 2024 announcements, technical experts provide a cautious yet strategic outlook for the Nifty index. Key support and resistance levels identified by experts offer valuable insights for traders and investors, helping them navigate the post-budget volatility. By closely monitoring these technical indicators and market conditions, market participants can make informed decisions and manage their positions effectively.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision