The Budget proposals met with muted response from investors on Dalal Street during Saturday’s special trading session, although there were stock and sector specific movements. After some volatility during the FM’s Budget speech, the sensex and Nifty both treaded a steady path and closed barely changed. Sensex was up just five points at 77,506 points, while Nifty was down 150 points (0.6%) at 23,482.
During Saturday’s session, extreme bullish sentiment around stocks from sectors like real estate, FMCG, consumer durables, consumer discretionary and automobiles was cancelled out by strong selling in stocks from sectors like capital goods, power, utilities, etc.Despite it being a holiday for most institutions, foreign funds were aggressive sellers, while domestic funds were net buyers, BSE data showed.
Most market veterans, however, remained bullish on equities as they believe the Budget proposals will have a positive impact on the economy and the stock market.
“While short-term volatility could be par for the course due to the current global economic backdrop, the long-term direction rooted in policy prudence and support for growth should bolster Destination India’s credentials for foreign and domestic investors alike,” said Navneet Munot, MD & CEO, HDFC Mutual Fund.
The FM’s income-tax proposals are expected to put an extra Rs 50,000 to Rs 1.1 lakh in every taxpayer’s hands annually, part of which could find its way to the stock market, analysts said.
“Increase in disposable income enhances consumption growth and provides further wealth creation opportunities to Indian households through the markets,” said Ashishkumar Chauhan, MD & CEO, NSE. “More and more people will join the pool of 11 crore unique investors and will become stakeholders and beneficiaries of India’s growth journey. They’ll support a virtuous cycle of economic growth, capital formation and job creation,” he said.
According to A Balasubramanian, MD & CEO, Aditya Birla Sun Life MF, the Budget this time prioritised consumption-driven growth and provides an opportunity for long term investors.
“Measures like simplified tax structures and reduced surcharges combined with a focus on agriculture and rural incomes should boost overall sentiments, consumption, savings, investments and support key sectors like consumer durables. The Rs 1.5 lakh crore capital expenditure/investment is expected to generate a Rs 3-4 lakh crore multiplier boost to the economy. Expected interest rate cuts will lower capital costs and fuel economic expansion and employment,” he said. “All of this should improve economic and market sentiments in an uncertain global order and boost investor confidence. Despite short-term market volatility, robust fundamentals make India a promising opportunity for long-term investors.”
According to fund managers, the Budget has put the Indian consumers at the centre stage. “The demographic dividend in Indian democracy should create demand, which is a step in the right direction,” said Sandeep Bagla, CEO, Trust MF. “The stage is set, the baton has been passed on to the consumer. Now it depends upon the resilience of the Indian middle class and the spirit of the private sector, which will dictate the pace of Indian economic growth,” he added.
During the day, among the sensex stocks, ITC, Zomato and Maruti contributed the most to the gains. On the other hand, strong selling in L&T, HDFC Bank and Infosys pulled the index down, BSE data showed. Outside of the sensex, while midcaps faced some selling pressure, smallcap stocks attracted investor interest. BSE’s midcap index closed 0.5% lower, the smallcap index was up 0.3%. The day’s session left investors poorer by about Rs 17,000 crore with BSE market capitalisation now at nearly Rs 424 lakh crore.
