Budget 2024: Realty Sector Takes a Hit, What's Next?
The recent Union Budget 2024 has brought significant changes to the realty sector, including the withdrawal of indexation benefits and a cut in long-term capital gains tax. What does this mean for investors and the sector as a whole?
RealtyBudget 2024Union BudgetMarket OutlookTrading StrategiesReal EstateDlfGodrej PropertiesLodhaReal Estate MumbaiJul 23, 2024
The Finance Minister, Nirmala Sitharaman, proposed these changes in India's Budget for FY25, which has sent shockwaves through the realty sector. The Nifty Realty index was down 3.7% at 1,051, with individual shares such as DLF, Brigade Enterprises, Prestige Estates, Godrej Properties, and Sunteck Realty declining over 4% each.
Anuj Puri, Chairman of ANAROCK Group, believes that the increased standard deduction limit and new income tax slabs may bring some savings for individual taxpayers, but it's unlikely to boost housing demand. However, Amit Goyal, Managing Director of India Sotheby's International Realty, welcomes the reduction of long-term capital gains tax, even though it comes with the removal of indexation benefits. He believes this will encourage more liquidity in property transactions and bring higher uniformity in long-term capital gains tax across different asset classes.
The budget also emphasized the need for digitization, efficient land management, and modernized bylaws, which will improve ease of property transactions and strengthen municipal finances through increased property taxes.
From a technical standpoint, the Nifty Realty index has dipped below its 50-DMA for the first time since June 04. The index is currently quoting below its 50-DMA, which stands at 1,070. The key momentum oscillators on the daily chart are indicating a weak bias, given the negative crossover on the 14-day RSI, MACD, and Slow Stochastic.
For DLF, the stock is seen testing support around its 200-DMA, which stands at Rs 772. The overall bias is likely to remain cautiously optimistic as long as the stock holds above the 200-DMA. Below which, the next key support levels for the stock stand at Rs 757 and Rs 740.
Godrej Properties stock is seen testing support around its super trend line, which coincides with the lower-end of the Bollinger Bands at Rs 3,070. Below which, the next near support for the stock is seen at Rs 3,015.
ANAROCK Group is a leading real estate consultancy firm, while India Sotheby's International Realty is a prominent luxury real estate brokerage firm.
Information
The Union Budget 2024 is a comprehensive financial plan presented by the Indian government, outlining its revenue and expenditure for the upcoming fiscal year. The budget aims to promote economic growth, improve living standards, and create jobs.
Frequently Asked Questions
What is the impact of Budget 2024 on the realty sector?
The budget has withdrawn the benefit of indexation for calculation of long-term capital gains in case of resale of house/property, and lowered LTCG from 20% to 12.5%.
How will the changes in LTCG affect real estate transactions?
The reduction in LTCG will encourage more liquidity in property transactions and bring higher uniformity in long-term capital gains tax across different asset classes.
What is the technical outlook for the Nifty Realty index?
The index has dipped below its 50-DMA, indicating a weak bias. The key momentum oscillators on the daily chart are indicating a negative crossover.
How will the budget's emphasis on digitization and land management affect the realty sector?
It will improve ease of property transactions and strengthen municipal finances through increased property taxes.
What is the impact of the budget on individual taxpayers?
The increased standard deduction limit and new income tax slabs may bring some savings for individual taxpayers, but it's unlikely to boost housing demand.
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