India’s equity market gave a big thumbs up to the Union Budget as key benchmark indexes- BSE Sensex and NSE Nifty- rose up to two per cent each.
The Sensex rallied to the day's high of 60,770, up 1,200 points, as Financial Minister Nirmala Sitharaman proposed changes to income tax slabs for individuals. The Nifty50 hit a day high of 17,970.
Sitharaman announced that the tax rebate has been raised from Rs 5 to 7 lakh under the new regime. The market also welcomed the government’s decision to step up spending and bring no changes in the long-term capital gains. Sitharaman said the government will spend Rs 10 lakh crore on longer-term capital expenditure in the financial year 2023-24.
Vinod Nair, Head of Research at Geojit Financial Services said, “The market had mixed expectations on the budget presuming to be populist and low elbowroom for the government ahead of the slowing economy, high inflation and interest rates. However, the government has taken it to a new zone with a well-tuned perfection between growth and stability."
"The rise in capital expenditure by 33 per cent to Rs10 lakh crore is the shot in the arm heading a multiplier effect on the economy. While a high amount of schemes and tax benefits to the rural economy and taxpayers will enhance consumption growth in India. Much beyond expectations, a win-win for households and corporates," he added.
Banking stocks are leading the Budget day rally as Kotak Mahindra, HDFC Twins and ICICI Bank surged between 2-4 per cent in the Nifty pack. Insurance firms - SBI Life and HDFC Life - were the biggest laggard, falling 6-7 per cent each.
Meanwhile, Adani Group stocks continue to go down and haven’t benefited from the budget day rally. Adani Total Gas (down 10 per cent ), Adani Power (down 5 per cent ) and Adani Wilmar (down 5 per cent ) again hit their respective lower circuits. Adani Enterprises, Adani Ports, Adani Green and Adani Transmission were trading with a big cut of 5-8 per cent.
The group’s cement entities: ACC and Ambuja - were also down 3% while media outlet NDTV fell 5 per cent.
Adani stocks are in a free fall since last Wednesday when US-based investor activist firm Hindenburg Research accused the port-to-power conglomerate of pulling the “largest con in corporate history” by engaging in “brazen stock manipulation and accounting fraud” over the course of two decades. The Adanis have called the report “maliciously mischievous and unresearched” and said it was evaluating legal action.