In addition to regulatory actions against small and midcaps, tighter liquidity conditions are another headwind that stocks are facing this month. Market observers say advance tax outflows and capital gains-related adjustments will weigh on the markets in the near-term. Any trader with a liability of over %10,000in the form of capital gains had to pay advance tax this month. Additionally, losses can be set off against capital gains.
“"Some selling is likely to happen next month, assume traders will be waiting for the next financial year to book profits so that they can avoid paying tax on capital gains," said an analyst. The National Stock Exchange Nifty 50 last closed at 22,023. Analysts say if the index breaches 21,800 on the downside, it could see another3 per cent correction.
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