The day’s volatility reflected the market’s response to the budget announcements, with investors assessing the implications and adjusting their positions accordingly. The successive modest movements suggest cautious market sentiment as participants digest the fiscal measures outlined in the budget.
Ahead of the budget announcement, the BSE Sensex experienced a remarkable rally, rising by 399 points to hit its day high at 72,151.02, while the Nifty similarly advanced by 107 points, reaching 21,832.95. However, both the benchmark indices witnessed a decline of nearly one percent each from their intraday highs after the budget unveiling, finally reaching their respective intraday lows. The Sensex ended the day 106.81 points or 0.15 percent lower at 71,645.30, while the Nifty settled 28.25 points or 0.13 percent lower, closing at 21,697.45.
The sixth budget presented by the current Finance Minister and the last of the second term of the Modi-led government emphasized fiscal consolidation, infrastructure, agriculture, green growth and railways. No changes were made in tax rates, disappointing salaried individuals. The Fiscal Deficit target for FY25 stood at 5.1 percent of GDP, exceeding expectations, with the FY24 target revised down to 5.8 percent. The FY25 headline target was raised by 11.1 percent to ₹11.1 lakh crore, signaling a focus on robust capital expenditure. The complete budget is planned for July after the formation of the new government post the Lok Sabha Elections.
“The domestic market was marginally disappointed by lower-than-expected infrastructure spending in the interim budget. However, the government’s commitment to fiscal prudence, targeting a fiscal deficit of 5.1 percent for FY25BE, is expected to improve the outlook on economic estimates. This led to a significant cut in India’s 10-year yield by 100bps to 7.04 percent, reflecting optimism over lower-than-expected government borrowing. Meanwhile, the US FED’s decision to keep rates on hold without clear guidance on future cuts dampened market sentiments,” Vinod said Nair. , Head of Research at Geojit Financial Services.
With the conclusion of the budget, market attention will return to earnings and the imminent RBI policy next week. How will the market perform going forward? What should your marketing strategy be now? Here’s what experts say:
Sonam Srivastava, Founder and Fund at Wright Research, PMS
In the aftermath of Budget 2024, investors are advised to adopt a strategic, long-term approach, focusing on sectors poised for growth due to the government’s latest policy initiatives. While the market digests the implications of the budget, investors should prioritize diversification, aligning their portfolios with sectors that can gain from the government’s focus on sustainability and digital transformation. Staying informed and adaptable will be key to effectively navigating the post-budget marketing landscape.
Ajit Mishra, SVP – Technical Research, Religare Broking Ltd
Markets oscillated in a narrow range on the budget day and settled marginally lower. The tone was positive initially, however, profit-taking appeared around the previous swing high. Consequently, Nifty surrendered all its gains and finally settled closer to the day’s low at 21,697.45 level. Meanwhile, a mixed trend on the sector front kept participants busy, with energy, auto and banking posting decent gains while metal and real estate traded under pressure.
Markets are in no rush for the next directional move and the recent price action reaffirms our view. Traders have no option but to align their positions accordingly and focus more on a stock-specific trading approach. Although we see consistent outperformance of the broader indices despite the overbought condition, we believe it is prudent to limit exposure and favor only quality names.
Nifty traded in a narrow range after a major event and closed with a loss of 28 points at 26,697 levels. Sectorally it was a mixed bag. Major buying was seen in government companies especially PSU Bank (index), which rose 3 percent after FM speech. On the global front, the US Fed ended up maintaining its status quo and did not hint at an early rate cut, which dampened global sentiments. In the Interim Budget, the government emphasized on empowering 4 pillars of Viksit Bharat namely Youth, Poor, Women and Farmers. Furthermore, the government continues to focus on consolidating the fiscal deficit and investing in infrastructure. Some of the sectors to benefit are affordable housing and finance, infra, rail, defense and consumption. With two major events now behind us, we expect markets to receive support from the ongoing earnings season and should remain in positive territory.
Raj Vyas, VP of Research, Teji Mandi
This is a good budget and there is something for everyone. Well, it is a huge positive in terms of fiscal correctness, not only the next fiscal deficit is reduced to 5.1 percent, but the current annual estimate is also reduced to 5.8 percent against 5.9 percent earlier and the market did not expect something like this to come . . They have also reduced their borrowings which will affect the banking stocks positively as banks have a lot of liabilities and we may see EPS of banks rising by March 31, 2024.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 01.02.2024, 18:20 IST