Markets turn choppy on Budget day; Sensex, Nifty settle lower
“Historically markets don’t react too much to interim budgets and that pattern was maintained," said Avdhut Bagkar Technical and Derivatives Analyst, StoxBox
The mixed cues emanating from the government’s interim budget unveiled on Thursday pushed down benchmark equity prices as investors opted for profit-taking.
After shedding early gains, the markets turned volatile as finance minister Nirmala Sitharaman presented the budget, with outlay of capital expenditure marginally hiked but with no major announcement.
Sensex falls
The 30-share BSE Sensex fell 106.81 points or 0.15 per cent to settle 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 hovered between the day's high of 21,832.95 and a low of 21,658.75.
Market sentiments were also dampened after the US Federal Reserve indicated it likely won't cut interest rates in March.
Deficit trimmed
Sitharaman on Thursday hiked capital expenditure by 11 per cent for the next fiscal to sustain a world-beating economic growth rate.
She also trimmed the deficit in a reform-oriented budget that gave relief to common man from disputed small tax demands of up to Rs 25,000.
Presenting a vote on account for 2024-25, the minister proposed no changes in income tax rates for individuals and corporates as well as customs duty.
Government achievements
In less than an hour-long budget speech, she presented the Modi government's achievements in the last 10 years that she said had transformed India 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.
Market disappointed
"The domestic market was marginally disappointed by lower-than-expected infra spending in the budget. However, the government's commitment to fiscal prudence, targeting a fiscal deficit of 5.1 per cent for FY25, is expected to improve the outlook on economic ratings," said Vinod Nair, Head of Research, Geojit Financial Services.
The US FED's decision to maintain rates without clear guidance on future cuts dampened market sentiments, Nair added.
Interim budget
"Equity indices lost all their early gains during the presentation of the interim budget 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 coming elections 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.
Policy intent
"The policy intent was crystal clear as seen through the selective allocation of resources, with stronger emphasis on sectors of rural and middle-class housing and Green Energy," said Amar Ambani, Executive Director, YES Securities.
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.
GST collections
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.
"It is noteworthy is that this is a budget entirely focused on fiscal consolidation and not populism," said Sahil Kapoor, Head, Products and Market Strategist at DSP Mutual Fund.
Asian markets
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.
Global oil benchmark Brent crude climbed 0.66 per cent to USD 81.08 a barrel.
FIIs buy equities
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.
(With agency inputs)
