Budget sops boost Indian stocks

The Indian stock markets cheered the much-anticipated budget unveiled by Finance Minister Nirmala Sitharaman on Monday, showing bullish cues. The benchmark S&P BSE Sensex closed up 2,314.84 points, or 5 per cent, at 48,600.61 and NSE Nifty 50 index rose 4.74 per cent, or 646.60 points, to 14,281.20.

Analysts said the markets were largely happy with the various schemes Sitharaman announced across key sectors like healthcare, auto, infrastructure and agriculture.

Vijay Valecha, chief investment officer, Century Financial, said: “Markets saw the budget announcement as positive with various measures seen helping the economy in the longer run. Markets hugely cheered the proposal to raise the expenditure and allowing for a wider fiscal deficit during such turbulent times. One of the major positives was an increase in capital expenditure spend at 2.5 per cent of GDP for the current fiscal against 1.7 per cent last year. Other major positives were spending increases in housing, infrastructure, health and textiles sectors, along with the creation of a special asset management company for taking on existing bad debts/NPL present in the banking system.”

Markets especially cheered the absence of any increase in wealth tax and long-term capital gains on equity investments. Before the budget announcement, markets had expected a Covid-related surcharge. However, the budget kept the status quo intact as far as imposition of any additional taxes or surcharges is concerned. On the investment side, rationalisation of tax structures for foreign portfolio investors (FPIs), NRIs, Reits will go a long way in attracting fresh capital. On the Sensex chart, IndusInd Bank was the top gainer, rallying over 14 per cent, followed by ICICI Bank, Bajaj Finserv, SBI, L&T and HDFC. On the other hand, Dr Reddy’s, Tech Mahindra and HUL were the laggards.

Indian markets opened on a positive note tracking positive global bourses. During the afternoon session, the markets reacted positively to the budget. All the key market indices witnessed a sharp rise as investors welcomed the big infrastructure and healthcare boost provided in the budget.

According to Lav Chaturvedi, ED and CEO at Reliance Securities, the single securities market code announced in the budget speech will bring about ease of doing business in the Indian financial markets. This, along with the FDI regime and development of financial institutions, would be transforming for the financial markets, he added.

Sitharaman proposed more than doubling of healthcare spending while imposing a new agri cess on certain imported goods and raising customs duty on items ranging from cotton to electronics in a bid to pull the economy out of the Covid-induced trough. She also allocated Rs200 billion to recapitalise state-run banks that are saddled with bad loans and have been a drag on growth.

— sandhya@khaleejtimes.com