NEW DELHI: Domestic equity market witnessed significant volatility on Budget day, with benchmark indices BSE Sensex and NSE Nifty opening the special trading session on a positive note before experiencing a sharp decline between 11:45 AM and 11:55 AM.
The Sensex plunged nearly 900 points from its peak but rebounded into positive territory by around 1:40 PM. By the close of the session, the Sensex ended marginally higher by 5.39 points (0.01%) at 77,506 while the Nifty slipped 26.25 points (0.11%) to settle at 23,482.
During the trading session, Sensex hit an intraday high of 77,899 and a low of 77,006 and the Nifty50 gyrated between 23,632 and 23,339. The sharp fall during the budget hour is primarily attributed to a low increase in capital expenditure (capex), which according to experts, might weigh on economic growth. For 2025-26, the capex has been increased by a modest 10% to `11.2 lakh crore.
Pankaj Pandey, Head of Research, ICICI Direct said that the budget is a confluence of consumption push (through personal income tax benefit) and capex moderation with fiscal prudence taking precedence over growth.
“We note that FY26 Capex allocation of Rs 11.2 lakh crore, growth of 9.8% YoY over FY25RE is a bit modest, albeit, clearly reflects the government commitment towards fiscal prudence (with Fiscal deficit pegged at 4.4% in FY26 vs. 4.8% in FY25RE), despite growth moderation,” added Pandey.
Given the consumption-focused budget, Pandey expects a pickup in consumption pockets given the tax relief, while capex space is likely to witness only a selective move, ahead. Among sectors, Consumer Durables, Realty, Auto and FMCH indices gained between 1.9% and 3.3%. On the other hand, Capital goods, power, PSU indices, which are dependent on capex, fell 2-3%. Metal, IT, energy declined 1-2%.
Pranav Haridasan, MD and CEO, Axis Securities said that sectorally, this budget is particularly positive for consumer and consumption-driven stocks, which have underperformed recently but now stand to benefit from a demand revival. This conviction comes as the personal income tax will be exempted for individuals earning up to Rs 12 lakh annually, leaving them with higher disposable income.
“Financials also present a strong opportunity, acting as a key proxy for economic growth. With the recent correction in both sectors, they offer significant value for investors,” he added. Manish Jain- Chief Strategy Officer, Institution Business, Mirae Asset Capital Markets said that the budget is not very positive for banking. He added that a rise in gross borrowings is negative for banks as yield could rise which could impact treasury income.