Budget 2024: How stock market experts decode Nirmala Sitharaman's speech

Following the Finance Minister's speech, experts have shared their outlook and key takeaways from the Budget 2024 announcements

The Union Finance Minister, Nirmala Sitharaman, presented the Union Budget 2024 in Parliament on Tuesday, marking her seventh consecutive budget presentation. During her speech, the Finance Minister made several major announcements, focusing on the poor, women, youth, and farmers. These included an increase in expenditure to create more job opportunities, revision in tax slabs under the new tax regime, changes in capital gains taxes, customs duty reductions, duty cuts on medicines and mobile phones, and budget allocations for Andhra Pradesh and Bihar.

Meanwhile, the equity markets remained volatile on Budget day, led by massive sell-offs. The benchmark equity indices, the BSE Sensex and the NSE Nifty50, plunged over 1 per cent during intra-day trade on Tuesday. However, the markets exhibited some recovery and settled almost flat, with the Sensex ending at 80,429.04, down 73.04 points or 0.09 per cent, and the Nifty50 at 24,479.05, down 30.20 points or 0.12 per cent.

Following the Finance Minister's speech, experts shared their outlook and key takeaways from the Budget 2024 announcements.

Ajit Mishra – SVP, Research, Religare Broking Ltd

Union Budget day turned into a roller coaster for investors, with the Nifty Index fluctuating dramatically before ending the session flat. The initial mood was subdued, but the announcement of increased STT on F&O and higher STCG and LTCG tax rates sparked a sharp reaction midway through the day. However, buoyant performance from select heavyweights helped recover most of the losses in the latter half.

Given the volatility, we advise maintaining a cautious stance. It’s crucial for Nifty to sustain above the 24,200 level to keep a positive outlook; otherwise, profit-taking may intensify. Traders should adopt a hedged approach and favor defensive sectors such as FMCG, pharma, and IT for long trades. Conversely, avoid adding to positions in overbought themes like defense, railways, and select PSUs, and use any recovery to reduce exposure in loss-making trades.

Vinod Nair, Head of Research, Geojit Financial Services

Domestic investors had high expectations from the budget to increasing revenue and capital expenditure. However, the narrative is mixed, by curtailing expenditure while attaining fiscal prudence, which can limit further growth. During the year, the market has fairly factored in ongoing growth and trading at a high premium. To sustain that gap, corporate growth has to be maintained, which is experiencing a slowdown as per the ongoing Q1 result.

Pranav Haridasan, MD & CEO, Axis Securities

The Union Budget 2024-25 has presented short-term challenges for the markets. The rise in capital gains tax rates and the increased STT are a short term negative. The capital expenditure allocation, unchanged at Rs 11.1 lakh crore, fell short of the expected Rs 11.5-12 lakh crore. However, the budget does have its positives. The fiscal deficit has been reduced to 4.9 per cent, compared to 5.1 per cent in the interim budget, demonstrating a solid fiscal consolidation path. Additionally, the budget places a strong emphasis on welfare schemes, aiming to alleviate rural distress and support the rural economy. Despite the initial market reaction, the impact is expected to be temporary, with a return to normalcy anticipated soon.

Sandeep Upadhyay, Managing Director – Infrastructure Advisory Centrum Capital Ltd

The intention expressed in the budget speech is to attract increased funding for capital expenditure in the infrastructure sector through innovative financing mechanisms. This includes encouraging the private sector to participate more actively, supported by viability gap funding provided by the government. I foresee a gradual shift from solely relying on Annuity models and cash contracts, which have been predominant in capacity addition in recent years. This shift aims to diversify financing sources and stimulate greater investment in infrastructure projects across the country.

Pradeep Gupta, Co-founder & Vice-chairman, Anand Rathi Group

India's FY25 budget closely aligns with fiscal forecasts, highlighting a prudent yet growth-focused fiscal policy. The budget proposes a 17 per cent increase in public capital expenditure and a modest 6 per cent rise in revenue expenditure. This controlled spending framework is projected to reduce the fiscal deficit to 4.9 per cent of GDP, slightly improving from the interim forecast of 5.1 per cent. The budget remains committed to strengthening the infrastructure, manufacturing, and housing sectors, which are crucial for long-term economic resilience. Additionally, it introduces targeted measures to boost consumption among low-income groups by focusing on agriculture and welfare schemes and improving access to finance. For the middle-income bracket, the budget encourages consumption through employment incentives and selective income tax reliefs, aiming to stimulate consumer spending and economic vitality.

Despite the overall pro-growth orientation of the budget, the increase in capital gains tax has temporarily impacted equity market sentiments. However, this disturbance is expected to be short-lived, with the broader fiscal strategy fostering a favorable environment for inflation control and sustained financial market positivity in the longer term. This strategic fiscal plan demonstrates a meticulous balancing act, aiming to maintain fiscal health while stimulating economic growth, showcasing the government's commitment to managing the complexities of economic stewardship.

Umesh Sahay, Founder and CEO, EFC India

The Union Budget 2024 brings transformative changes to the investment landscape. The significant shift for REITs and InVITs, now treated as long-term after just 12 months instead of 36, opens new horizons for investors. This progressive move not only boosts market confidence but also aligns with our vision of fostering robust economic growth and investment opportunities.

Rajiv Sabharwal, Managing Director and CEO of Tata Capital Ltd

The Union Budget 2024 represents a pivotal moment for India’s economic growth, emphasizing substantial infrastructure investments and sustainable development. The extensive funding for infrastructure will propel economic momentum and modernize essential sectors. Enhanced Mudra loan limits and a new credit guarantee scheme are set to stimulate growth and innovation among small and medium enterprises (SMEs). Targeted investments in energy security and green initiatives are poised to drive long-term stability and environmental progress. Overall, the budget lays a solid groundwork for India’s future, driving progress and resilience. 

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities

In the Budget, the Finance Minister announced a reduction on Basic Custom Duty on gold and silver from 10 per cent to 6 per cent. Adding 5 per cent AIDC, which remains unchanged, the total import duty on gold and silver is reduced from 15 per cent to 11 per cent now. As a result, the price of gold reacted lower in MCX by more than Rs 2000 to Rs 70,350, and silver by Rs 2500 to Rs 86,600 as the market prices in the lower import duty gap of 4 per cent. The broad view remains volatile and weak as Comex gold stays below $2415.

Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One Ltd

In the budget held today the Finance minister has announced a reduction on Basic Custom Duty in Gold and Silver from 10 per cent  to 6 per cent . Adding 5 per cent AIDC ( Agriculture Infrastructure and Development Cess), which remains unchanged, total import duty on Gold and Silver is reduced from 15% to 11% now. The price impact can already be seen on gold and silver prices on the domestic market as both gold and silver prices are down by around 2.5 per cent trading at Rs 70874/10 gm's while silver trades at around Rs 87000/kg mark respectively.  The momentum will likely continue lower in the coming trading sessions and we can soon see gold price heading lower towards Rs 69000/10 gm's mark and silver towards Rs 85000/kg mark in the next few reading sessions.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

The capex target of FY25 has been set at Rs 11.1 lakh crore, up by 11.1 per cent. This is unchanged from that announced in the interim budget in February. No change in capex outlay is a major positive and shows the governments resolve to balance both the infrastructure development and populism of coalition politics. FY25 capex outlay at 3.4 per cent of GDP.

Kirang Gandhi, Personal Financial Mentor shared his view on the Union Budget 2024

The Union Budget 2024 sets the stage for 'Vikshit Bharat 2047,' aiming to create a prosperous, inclusive, and technologically advanced nation. The substantial investments in infrastructure, renewable energy, and digital innovation are pivotal in driving sustainable economic growth and enhancing India’s global competitiveness. Investing in these areas will not only stimulate immediate economic activity but also create long-term benefits through improved connectivity, energy efficiency, and technological advancement. The budget’s focus on education, healthcare, and skill development is crucial for building a robust and empowered workforce capable of meeting future demands. Moreover, the progressive fiscal policies designed to ensure equitable wealth distribution will contribute to a more balanced and inclusive economic environment. By addressing these critical areas, the budget positions India to emerge as a global leader by its centenary, paving the way for sustained growth and development.