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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.
First Published: Feb 01 2022 | 8:15 AM IST