NEW DELHI: Domestic equity market gave up the early gains of the budget day (Thursday) and fell into the negative zone after Finance Minister Niramala Sitharaman completed her interim budget speech for FY24-25.
After gyrating between green and red, the BSE Sensex at close was down 106.81 points or 0.15% at 71,645.30, and the Nifty was down 28.20 points or 0.13% at 21,697.50. In the broader market, the BSE Midcap index fell 0.40% while the Smallcap index declined 0.22%.
This is one of the rarer times when the market has logged losses on a budget day. Except in 2020, the BSE Sensex ended in the positive territory on the Budget days in 2023, 2022, 2021 and 2019.
The foreign institutional investors (FIIs) continued with the outflow trend as they sold (net) equities worth Rs 1,879.58 crore on Thursday, according to provisional NSE data. As per market experts, the muted response from investors came as the Budget was largely in line with expectations and there were no major soaps to boost buying at current valuations.
“As anticipated, this vote-on-account budget presented no major surprises for equity markets,” said Pranav Haridasan, MD and CEO, Axis Securities. He added that the budget infused enthusiasm into the bond market and all interest rate sensitives with its announcements regarding fiscal prudence and subsidy reductions.
Haridasan also said that coupled with net borrowings of Rs 11.75 lakh crore, which is less than market expectations, the bond markets have much to rejoice. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the fiscal deficit numbers of 5.8% in the revised estimates for FY24 and 5.1% for FY25 are better than the most optimistic expectations.
“This is very good news for the economy and consequently for the market. The boost to housing is another important proposal from the market perspective since this will benefit industries like cement, steel and all construction-related segments,” added Vijayakumar.
Following the budget announcement where the government decided to go for lower than anticipated borrowing, India’s 10-year benchmark bond yield came down to 7.0370%, its lowest level in seven months.
Rajeev Radhakrishnan, CIO of Fixed Income, SBI Mutual Fund, said, “A faster than anticipated pace of fiscal consolidation and gross borrowings being lower than market estimates have been the positive features of the budget from a bond market perspective. The cushion from the GST compensation cess has enabled the gross borrowings to be lower at Rs 14.1 lakh crore.”
The government expects to get Rs 1.23 lakh crore from the GST compensation fund in FY2024-25. A chunk of this fund will be used to for upcoming bond redemption.
FIIs sell equities worth Rs 1,879.58 cr post-Budget
The foreign institutional investors (FIIs) continued with the outflow trend as they sold (net) equities worth Rs 1,879.58 crore on Thursday, according to provisional NSE data. Aaccording to market experts, the muted response from investors came as the Budget was largely in line with expectations and there were no major soaps to boost buying at current valuations.