Bulls cheer Budget 2022; Sensex ends 848 pts higher, Nifty above 17,550

Sectorally, the Nifty PSU Bank index ended in the red, down 0.6 per cent, as the Budget document remained silent on PSB privatisation

Frontline indices whipsawed in trade on Tuesday but eventually ended 1.4 per cent higher as investors gave a thumbs up to pro-growth Budget 2022. Finance Minister Nirmala Sitharaman on Tuesday unveiled a Budget that aims to boost growth amid continued disruption from Covid-19 and rising inflation.

Moreover, analysts said the Budget continued the focus on 'quality' expenditure and increased the capex by 35 per cent in key sectors like Infra, housing, defence and agriculture etc which is ought to have a multiplier effect on the economy. Apart from public-private investments, clean energy focus is amply clear with additional allocation to Solar PLI and policy around battery swapping. Moreover, the focus is also on inclusive growth as several measures were announced to ease supply-side issues and promote domestic manufacturing.

Overall, while there was little relief on the personal income tax front i.e. capping of surcharge on LTCG and easing of tax compliance, with no other negative surprises, analysts believe the focus on spending more would create employment opportunities and help in kick-starting the investment cycle which in turn would help to strengthen the economic growth.

Against this bckdrop, the S&P BSE Sensex started with a positive gap and extended its rally post Budget announcements to hit a high of 59,032. This was over 1,000 points higher than yesterday's close. However, profit-booking dragged the index 1,294 points down to a low of 57,738. But, positive global cues and long-term benefits of the Budget once again gave bulls the ammunition to take the index 848 points higher to finally settle at 58,863 levels.

On the NSE, the Nifty50 followed a similar trajectory and gyrated 367 points intra-day to hit a high of 17,622 and a low of 17,244. It eventually closed at 17,577, up 237 points.

In the broader market, the BSE MidCap index closed with a gain of 1 per cent while the BSE SmallCap index ended 0.9 per cent up. Volatility index, India VIX, cooled off 9 per cent to end below the 20-mark.

Among individual stocks, Tata Steel, Sun Pharma, IndusInd Bank, Shree Cement, L&T, and Hindalco were the top large-cap gainers while BPCL, IOCL, Tata Motors, M&M, and ONGC were the top laggards.

Budget impact
Shares of defence stocks rallied up to 5 per cent in Tuesday's trade amid the government's move to increase sourcing locally. Finance Minister Nirmala Sitharaman in her Budget speech said 68 per cent of capital for the defence sector will be earmarked for the local industry. This is against 58 per cent at present.

Sugar stocks rallied after Finance Minister Nirmala Sitharaman proposed to levy additional excise duty of Rs 2 per litre on unblended fuel. The tax will be applicable from October 1, 2022. ICICIdirect believes this would encourage ethanol blending of fuel and will be positive for sugar companies.

Metal stocks soared after the government announced Rs 7.5 trillion capex plans for the financial year 22-23. Moreover, the government also proposed to extend the customs duty exemption on steel scrap by one year.

PSU Bank stocks declined as the Budget document remained silent on PSB privatisation.

4:40 PM

Expert take :: Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance

Although the deficit for FY23 is a higher than the market expectations thereby causing the yields to move up, we believe this will have a positive impact on the economy and growth. While many aspects have been covered in the budget, the emphasis has been on promoting the domestic manufacturing, digital and start up economy. Production linked incentive schemes which has been a good success continued to receive more allocations, and MSME segment continues to get fillip with the extension of ECLGS scheme for one more year. Introduction of digital rupee, and taxation of virtual assets will help channelize the domestic savings for productive use.

4:20 PM

Expert take :: Banking, Capital Goods and IT continue to be preferred sectors post Budget

A Budget with a Vision for India at 100 demonstrates Governments 360 degree understanding on how to keep the Indian economy, fastest growing economy in the world, for a sustained period of time. Roadmap of India at 100 - Embraces Digitisation to Drone, Clean and Green Energy to batter swapping policy, Crypto and blockchain apart from continued emphasis on physical infrastructure creation.

Not giving in to spending on populist measures and over spending on Capex shows a strong resolve to do the right thing for long term, at the cost of short term benefits. Moderate assumptions on Revenue growth targets and divestments makes Fiscal deficit numbers more believable.

Governments sustained spending on infra and PLI led capex growth along with a strong turnaround in residential real estate markets and sustained growth in IT segment will continue to support job creation and consumption in the medium term. While Equity markets may give moderate returns this year, as compared to the strong returns for the last two years.

Banking, Capital Goods and IT continue to be preferred sectors at Prabhudas Lilladher

Views by: Amisha Vora - Joint MD, Prabhudas Lilladher

4:08 PM

Market outlook by Ruchit Jain, Lead Research, 5paisa.com

Our markets witnessed a fair bit of volatility post the Budget speech but given that it was a big event, such moves were much on expected lines. The follow up move post the initial reaction was very important and we witnessed a V-shaped recovery from the lows which indicates a buying interest amongst market participants at dips. Thus, the trend for the market continues to be positive and until and reversal signs seen, we continue with our optimistic view on the markets. The banking space continued to witness strength and the Metals stocks which were trading around their respective supports too witnessed buying interest. Stocks from these sectors could continue to lead the momentum on the positive side. The immediate support for Nifty is now placed around 17400 and 17270 while 17770-17800 would be the immediate levels to watch out on the higher side

4:02 PM

MARKET COMMENT :: Nimish Shah, Chief Investment Officer – Listed Investments, Waterfield Advisors

While Fiscal math is worrying the bond markets with yields are up 15-20 bps, equity markets are in euphoria on the back of a budget that has shown credibility, continuity, and consistency. Capital gains taxation on Crypto / Digital Assets and introduction on Digital Rupee in 2022-23 brings about the intent of the government to regulate the space even before the Crypto Bill is tabled in the Parliament

3:59 PM

Budget 2022 :: Impact of Budget on BFSI sector

 Most important announcement for banking sector has been the focus on capex. Credit requirement from industry is expected to boost credit growth from banks

Digital focus stays with RBI to launch India’s official digital currency using the blockchain technology in FY22-23. Any gains in case of transfer of virtual/digital assets will be taxed at 30%. Also, TDS of 1% to be deducted on payments made for such assets above certain threshold

ECLGS scheme extended till March 2023 to benefit business growth for MSME focused banks and NBFCs

On the flip side, the impact of higher fiscal deficit and borrowing led  bond yields to surge 15-20 bps. Accordingly, treasury gains were impacted negatively, particularly for PSU banks

Focus on affordable housing segment continues with allocation of Rs 48000 crore for PM housing scheme bodes well for growth in secured portfolio of large banks and HFCs

Views by:  Kajal Gandhi, Analyst, ICICIdirect

3:42 PM

MARKET COMMENT :: Budget may have short-term implications

It is a long-term growth oriented budget which the market has welcomed given no headroom for cautiousness & populist measures. It is expected to support growth in the future; however, it is missing some balancing measures in context of current inflationary & slowing economy. Supportive measures were needed for rural, agriculture, low taxpayers & for sectors impacted by the pandemic. High capex, fiscal deficit  & borrowing plans in the background of a high inflation, commodity & oil prices and rising interest rates will be challenges in the short to medium-term

Views by: Vinod Nair, Head of Research at Geojit Financial Services

3:41 PM

Index contributors :: ICICI Bank, Infosys, L&T account for nearly half of Sensex's gains today

3:40 PM

Sectoral trends on the NSE :: PSBs, Auto fail to gain investor fancy

3:39 PM

Sensex Heatmap :: Tata Steel leaps 7.5%, ends as top 30-pack gainer

3:37 PM

CLOSING BELL :: Nifty holds 17,550

3:37 PM

CLOSING BELL :: Sensex ends 848 pts higher

3:16 PM

NEWS ALERT :: This budget brings in new hopes and opportunities for the people, says PM Modi

3:06 PM

Expert take :: Investment-oriented Budget 2022 will put strain on liquidity for sure

First, the deficit number is critical because as has been seen in the past that the government has stuck to the FRBM rules even during the pandemic times, and has been complimented by overseas agencies for not going in for rapid fiscal expansion. At 6.4 per cent, the fiscal deficit is on track to the 4.5 per cent mark to be reached by FY26. The borrowing this year will continue to be high at Rs 14.95 trillion (net of Rs 11.18 trillion) and put pressure on the market. READ MORE

2:59 PM

Expert take :: 35% increase in capex to have multiplier effect on the economy

The Union budget 2022-23 continued the focus on 'quality' expenditure and increased the capex by 35% which is ought to have a multiplier effect on the economy. Apart from public-private investments, clean energy focus is amply clear with additional allocation to Solar PLI and policy around battery swapping.  

Issuance of green bonds and promotion of GIFT great move to attract global investors.

On the consumption front, there is a bit of disappointment as there is no direct stimulus to spur growth and no major announcement on privatisation and the overall divestment targets are underwhelming.

Finally from taxation perspective, 'No news is good news'. Capital gains surcharge reduction for unlisted equity and debt is a positive development.

Views by: Ashish Gumashta, CEO, Julius Baer India

2:56 PM

Expert take :: Crypto tax is a step in right direction, says Sumit Gupta, Co-founder & CEO, CoinDCX

The budget is forward-looking and inspirational. It has touched key points that'll help us create modern, powerful, digital, and sustained growth. We welcome the budget and congratulate the Finance Minister for a futuristic budget.

On Taxation
Taxation of Virtual Digital Assets or Crypto is a step in the right direction. It gives much-needed clarity and confidence to the industry. India's focus on digital innovation and the promotion of blockchain technology is welcome.

On CBDC
Introduction of CBDC  sends a clear signal of India being a digital-first, efficiency-driven, and transparency-led system. CBDC with the backbone of Blockchain will help us hold a powerful position in the global economy. We welcome the move and congratulate the govt for this visionary move.