After budget boost, focus shifts to third quarter earnings, global cues

According to market experts, sentiments were boosted after the government decided to strict to fiscal prudence over populous measures with large focus on capital expenditure to promote economic growth.
Representative Image.
Representative Image.

NEW DELHI: Domestic equity market clocked a gain in the Budget week with benchmark indices Sensex and Nifty snapping two week of losing streak.

According to market experts, sentiments were boosted after the government decided to strict to fiscal prudence over populous measures with large focus on capital expenditure to promote economic growth.

While the equity market was quiet on the budget day, the following day (Friday) Sensex and Nifty rose sharply with the latter peaking to an all-time high at 22126.80. For the full week, the two benchmarks gained about 1-1.50% each.

“The major focus of the budget was on capex and consolidation theme. The major sectors which will benefit from the budget in the long term are infra, aviation, railways, metros, power, capital goods, agriculture, housing and technology to stay supported by government spends. Govt is also promoting tourism by providing long term interest free loans to promote iconic tourist centres,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services.

Finance Minister Nirmala Sitharaman presented the Interim Budget on February 1 wherein she announced a sharp cut in Fiscal deficit to 5.1% for FY25 and 5.8% from 5.9% for FY24. The govt also decided to keep capex growth steady and grow capex by 11.1% to Rs 11.11 lakh crore for FY25. The budget made no change in direct, or indirect taxation.

Sanjay Moorjani, Research Analyst at SAMCO Securities, said that the Finance Minister announced that the Centre is close to achieving its target of 3 crore houses in rural areas despite the impact of the Covid-19 pandemic. Additionally, the government has set a new target to build 2 crore more houses in the next five years under the Pradhan Mantri Aawas Yojana (PMAY Grameen). Moorjani said the significant announcement is poised to impact stocks in the steel, cement and power sectors positively, especially with the augmented budget allocation.

Sonal Varma, MD, Chief Economist - India and Asia ex-Japan, Nomura said the budget delivered a positive surprise. She added that while the budget speech talked a lot about the key voter constituents, it has chosen to prioritise fiscal consolidation. “This bodes well for macro stability and will be seen as positive by the RBI as well…Much better than expected fiscal deficit targets.,” Varma said.

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