There was a strong rise in the stock market on 13 October. Sensex rose 1109 points to cross 73,000, while Nifty registered a gain of 358 points. The positive stance of Finance Minister Nirmala Sitharaman regarding LTCG tax and STT increased the confidence of investors. At the same time, tremendous buying in IT shares and better quarterly results of HCLTech strengthened the market.
Tezzbuzz Desk- A spectacular recovery was seen in the Indian stock market on Tuesday, 13 October. During trading, both the major indices BSE Sensex and NSE Nifty registered a rise of more than 1.5 percent. Sensex jumped 1109 points and crossed the 73,000 level, while Nifty rose 358 points to close at 22,722. Comments of Finance Minister Nirmala Sitharaman, strong performance of IT companies and buying by investors at lower levels are being considered as the main reasons behind this rise in the market.
At the Bloomberg New Economy Forum held in New Delhi, Finance Minister Nirmala Sitharaman said important things regarding Long Term Capital Gains (LTCG) Tax and Securities Transaction Tax (STT). He indicated that the government is ready to listen to suggestions and ideas related to removal of LTCG tax during the discussion on the upcoming budget.
In fact, domestic and foreign investors have been raising questions about the tax on equity for a long time. The Finance Minister also mentioned the ongoing debate regarding STT. Along with this, the discussion on the issue related to implementing uniform tax system on different asset classes was described as positive.
Under the current regime, long-term capital gains on listed equity shares held for more than 12 months are taxed at 12.5 per cent. However, such profits up to Rs 1.25 lakh in a financial year are exempt from tax. The Finance Minister's statement regarding possible changes in the tax system increased the expectations among investors, the effect of which was also visible on the market movements.
The market got support from the rise in IT shares
The IT sector played the most important role in the market rise on Tuesday. A jump of about 4 percent was recorded in the Nifty IT index. Shares of major companies like TCS, Tech Mahindra and HCL Tech saw a rise of 2 to 5 percent.
Shares of HCL Tech rose by about 4.9 percent in early trade. The company reported a 21.2 per cent growth in net profit at Rs 5,132 crore in its quarterly results, which was better than market expectations. The company's annual revenue from advanced AI services also increased to $219 million.
Brokerage firm Jefferies upgraded the company's rating considering its stable outlook. At the same time, according to Dharmesh Kant of Cholamandalam Securities, the concerns in the market regarding the earnings of IT companies seem to be reducing. Due to this also the interest of investors in the sector increased.
Relief to investors due to fall in India VIX
With the rise in the market, volatility indicator India VIX also declined. It fell by about 7.5 percent to 14.12. The decline in VIX is seen as a sign of reduced investor apprehension regarding near-term risk in the market.
Apart from this, Nifty Realty Index registered a gain of more than 1 percent. Buying was also seen in FMCG shares. Hindustan Unilever shares rose 1.2 per cent, while ITC gained 0.4 per cent. Due to this, the market rally got support from many sectors.
Which levels are important for Nifty?
Technical analysts of the market are now keeping an eye on the major support and resistance levels of Nifty. According to Gaurav Udani of ThinCREW Securities, if Nifty is successful in maintaining the support zone of 22,350 to 22,400, then there may be a possibility of it moving towards the level of 22,600.
At the same time, according to Pabitro Mukherjee of Bajaj Broking, Nifty is currently trading in the range of 22,180 to 22,650. According to him, the possibilities of a big rise in the market will become stronger only after it emerges strongly above the level of 22,650.
Emphasis also on renewable energy and semiconductor sector
At the Bloomberg New Economy Forum, the Finance Minister also discussed new investment opportunities in India. He said that the trend of private investment is moving towards areas like renewable energy, data centre, green hydrogen and green ammonia.
He said that India is moving towards strengthening its position at the global level in the field of Artificial Intelligence as well as semiconductor chip designing. The government is working on manufacturing both advanced and less advanced chips.
Institutions like the National Bank for Financing Infrastructure and Development (NaBFID) and the National Investment and Infrastructure Fund (NIIF) are also playing an important role in promoting infrastructure development and investment in the country.
Overall, expectations regarding tax policies, better results of IT companies and buying at lower levels were the main factors behind the rise in the stock market on October 13. However, the further direction of Nifty will largely depend on key technical levels and investor sentiment.