MUMBAI, Feb 1: Benchmark equity indices Sensex and Nifty closed
lower on the Budget day on Thursday as investors resorted to
profit-taking in capital goods, metal and realty shares amid no big
announcements by finance minister Nirmala Sitharaman.
After shedding early gains, the markets turned volatile during the
presentation of the interim Budget, where in the capital
expenditure outlay was marginally hiked but there were no major
announcements.
The 30-share BSE Sensex settled lower by 106.81 points or 0.15 per
cent at 71,645.30. During the day, it gyrated between a high of
72,151.02 and a low of 71,574.89.
The Nifty dipped 28.25 points or 0.13 per cent to 21,697.45. It
oscillated between the day’s high of 21,832.95 and a low of
21,658.75.
Market sentiment was also dampened after the US Federal Reserve
indicated it likely won’t cut interest rates in March.
Finance Minister Nirmala Sitharaman on Thursday hiked capital
expenditure by 11 per cent for the next fiscal to sustain world-
beating economic growth rate while trimming the deficit in a
reform-oriented interim Budget that also gave relief to common
man from disputed small tax demands of up to Rs 25,000.
Presenting a vote on account or an interim Budget for 2024-25,
Sitharaman proposed no changes in income tax rates for
individuals and corporates, as well as customs duty.
In less than an hour-long budget speech, she presented the Modi
government’s achievements in the last 10 years that transformed
India from being a ‘fragile’ economy to the world’s fastest-growing
major economy.
She hiked capital expenditure to Rs 11.11 lakh crore for 2024-25
while trimming the fiscal deficit for this financial year to 5.8 per
cent, from the budgeted 5.9 per cent of GDP, and further lowering
to 5.1 per cent in the next fiscal.
“The domestic market was marginally disappointed by lower-than-
expected infra spending in the interim Budget. However, the
government’s commitment to fiscal prudence, targeting a fiscal
deficit of 5.1% for FY25, is expected to improve the outlook on
economic ratings,” said Vinod Nair, Head of Research, Geojit
Financial Services.
Meanwhile, the US FED’s decision to maintain rates without clear
guidance on future cuts dampened market sentiments, he added.
“Equity indices lost all their early gains during the presentation of
the interim Budget today to end in the red. Historically the markets
don’t react too much to interim Budgets and that pattern was
maintained this time as well. The elections in the upcoming months
will be a bigger market mover,” said Avdhut Bagkar Technical and
Derivatives Analyst, StoxBox.
Among the Sensex firms, Larsen & Toubro, UltraTech Cement, JSW
Steel, Titan, Bajaj Finance, Wipro, Tech Mahindra and Nestle were
the major laggards.
Maruti, Power Grid, Axis Bank, State Bank of India, NTPC, HDFC
Bank, ITC and IndusInd Bank were the gainers.
In the broader market, the BSE midcap gauge declined 0.40 per
cent and smallcap index dipped 0.22 per cent.
Among the indices, telecommunication fell by 1.55 per cent, capital
goods dipped 1.12 per cent, realty (1.05 per cent), metal (0.99 per
cent), commodities (0.91 per cent) and industrials (0.91 per cent).
Energy, FMCG, financial services, utilities and services were among
the gainers.
“In a short budget speech, usual for an interim budget immediately
preceding general elections, the FM largely traversed on a
sustained development trajectory. The Budget is largely non-
populist, given that there is barely any change in Budgeted
subsidies for FY25, uncharacteristic of an interim Budget ahead of
the national elections.
“The policy intent was crystal clear as seen through the selective
allocation of resources, with stronger emphasis on sectors of rural
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and middle-class housing and Green Energy,” said Amar Ambani,
Executive Director, YES Securities.
Clearly, the biggest plus for the market was the aggressive fiscal
deficit target of 5.1 per cent for FY25 versus the expectation of 5.5
per cent, he added.
Goods and Services Tax collections jumped 10.4 per cent to over Rs
1.72 lakh crore in January, reflecting buoyant economic activity and
setting the stage for the next phase of GST reforms.
In Asian markets, Seoul and Hong Kong settled in the green while
Tokyo and Shanghai ended lower.
European markets were trading on a mixed note. The US markets
ended sharply lower on Wednesday.
The US Fed on Wednesday left its main interest rate steady and
made clear it “does not expect it will be appropriate” to cut rates
“until it has gained greater confidence that inflation is moving
sustainably towards” its goal of 2 per cent.
“It is noteworthy is that this is a budget entirely focused on fiscal
consolidation and not populism, which was expected to be in focus
because of the upcoming general elections,” Sahil Kapoor, Head –
Products and Market Strategist at DSP Mutual Fund, said on
Budget.
Global oil benchmark Brent crude climbed 0.66 per cent to USD
81.08 a barrel.
Foreign Institutional Investors (FIIs) bought equities worth Rs
1,660.72 crore on Wednesday, according to exchange data.
The BSE benchmark jumped 612.21 points or 0.86 per cent to
settle at 71,752.11 on Wednesday. The Nifty climbed 203.60 points
or 0.95 per cent to 21,725.70. (PTI)
