This was the epitome of when whatever which could go wrong, did go wrong and then got worse. The Budget turned out to be a dose of heavy realism for the markets- higher Short Term gains tax; higher long term gains tax, higher STT on F&O- it was the recipe of a perfect disaster. And guess what happened, the markets collapsed in unison. It collapsed for a total of one hour and then, it roared back up like a phoenix.
Those of us who have been in the markets for sometime remember that fateful day in February 2018 when Arun Jaitley introduced the LTCG after a hiatus of one decade plus which led to the end of the then mega run in mid and small caps and there was a total panic in the markets which didn’t recover until after the corporate tax cuts in September 2019! One must have to have lived through that peril when the pessimism about the India story was immense. And the markets tanked and just didn’t recover. It took four years for the small and mid caps to come back to their 2017 highs, long after the Covid Period was over.
So what happened today! The taxes have been raised to an even more higher levels and the LTCG rate hike was completely out of syllabus. Everybody almost desperately wanted the F&O tax but higher LTCG and STCG- no way. It was the killer punch from the government. How the hell did markets recover?
The answer lies in two things- one, we are in the middle of a structural multi year sustained bull run which is going to rise above all walls of worries and two, this is the bottom for the market related stocks- the BSE/ Angel one types.
I’m calling it with my neck out as the absolute multi year bottom for BSE stock. you’ll not get this stock at anywhere close to 2000₹ for a very long time now. Why do I think so?
BSE is the director beneficiary of market activity as its volumes are rising since this is the place where trading happens, apart from NSE. The markets have made new lifetime highs but the price of BSE is effectively at October 2023 levels, having corrected 35% since May 2024! All the things which could go wrong, did go wrong- the SEBI tax demand which led to that famous 30% drop; news of higher F&O taxation, potential curbs by SEBI and the stock went into hiding. The poster boy of their post 2020 bull run collapsed while the markets made new highs repeatedly. This was also the time when it consistently grew its business side and achieved over 20%+ market share on a sustained basis in Q1 2025 and is on track to do over 25% in July 2024 in terms of volume in F&O. It’s cash volume is up over 50% YoY and it’s F&O volumes are rising at 10% month on month basis.
So I was convinced that the peak of the bad news will mark the end of the panic bottom and today was the absolute panic- 2105₹ post announcement of the budget which recovered to almost 2295 an hour later. It is obvious only in the hindsight but in my limited understanding of to markets, this is how bottoms are made.
The other newsmaker of the day was ITC! It’s a core holding for me and I was raising my positions all through the year and the stock is now clearly on track for at least 700+ levels. It’s the absolute best stock to own currently and I’m in love with its dividends!
Coming back to dividends, the newest member of the five digit club OFSS is still trading at 2.5% yield! It has been the fastest tripler of my career and with IT back in fashion, it won’t be a surprise if it doubles from here, at the very least!
Of course everything I say is with a huge ownership bias but anyone who has read this blog since inception knows that going back to the dark days of Covid pandemic, I was convinced that we are at the cusp of something incredible and what journey it has been! By the end of this decade, it won’t be a surprise if we go up 2-3x on index levels!
Stay bullish on India, Budgets or no budgets, the bulls won’t budge!
Disclaimer- The views expressed in this blog are personal opinions and are shared for educational and informational purposes only. They should not be considered as financial, investment, or legal advice. I write primarily to document my own learning and thinking process. I am not a SEBI-registered investment adviser, research analyst, or financial influencer, and no part of this blog should be seen as a recommendation to buy, sell, or hold any security. Please do your own research or consult a qualified professional before making any financial decisions.
Life is all about Compounding! 