Budget 2024: Sensex rebounds 1,200 points from day's lows to end flat

ITC gained 3.8 per cent as there were no changes in the taxes related to tobacco products

The benchmark S&P BSE Sensex rebound 1,200 points, or 1.5 per cent, from the day’s lows as the blow from higher taxes on equity transactions was offset by positives such as the Centre sticking to the fiscal consolidation path and measures to boost job creation and skill development.

Following the announcement of higher capital market taxes, the Sensex fell 1,542 points, or 1.91 per cent, from the day’s high to hit a low of 79,224. However, the index managed to recoup most of the losses, ending at 80,429, down 73 points, or 0.1 per cent, from its previous day’s close.

 

After recovering from the day’s low of 24,074, the National Stock Exchange Nifty 50 closed at 24,479, down just 30 points, or 0.12 per cent.

The broader markets also saw sharp recoveries from their day’s lows but underperformed the benchmarks. The Nifty Midcap 100 and the Nifty Smallcap 100 ended 0.6 per cent and 0.9 per cent lower, respectively.

The move to increase short- and long-term capital gains tax and securities transaction tax on derivatives came as a shock to market participants. However, most investors took the blow in stride, focusing on other measures seen as boosting the economy.

“The central government stuck firmly to the fiscal consolidation path, splitting higher revenues from the RBI dividend equally between fiscal consolidation and higher current expenditure,” said HSBC in a note.

Overall, market breadth was mixed, with 2,160 stocks declining and 1,743 advancing. The combined market capitalisation of BSE-listed firms declined by Rs 1.9 trillion to Rs 446 trillion.

Foreign portfolio investors were net sellers of Rs 2,975 crore, while domestic institutions provided buying support to the tune of Rs 1,419 crore.

ITC and Titan Company were the biggest gainers on both the Sensex and the Nifty. ITC shares rose 6.6 per cent as the government maintained the status quo on tobacco product taxes. Meanwhile, Titan shares gained, along with other jewellery stocks, after the government slashed the Customs duties by 6 per cent on gold and silver. However, spot gold prices fell 6 per cent to Rs 68,500 per 10 grams, the lowest level in more than three months after the announcement.

Trading volumes also remained elevated as traders reacted to various Budget announcements. The cash market turnover stood at Rs 1.8 trillion versus this month’s average of Rs 1.5 trillion, while the derivatives turnover stood at Rs 539 trillion versus July’s average of Rs 471 trillion. NSE said it set a world record for executing the largest number of orders in a single day.

Real estate, consumer, and banking stocks remained in focus. The Nifty Realty fell 2.3 per cent after the move to remove indexation benefits was seen as denting the appetite for real estate investments.

Consumer stocks gained, with the Nifty FMCG rising 2.7 per cent as the government allotted Rs 1.5 trillion for agriculture and allied sectors and lowered tax outgo under the new tax regime.

“We believe personal income-tax changes leading to a saving of Rs 17,500 is a positive for the overall fast-moving consumer sector as it will give more disposable income in the hands of consumers,” said UBS in a note.

The financial support to the fisheries sector led to gains of 4.6 per cent and 1.8 per cent in Avanti Feeds and Coastal Corporation.

Morgan Stanley, in a note, said the Budget had “three big surprises” for the equities market: “The unique incentive scheme for job creation, if it works, will be good for profits; the simplification of the tax code, including unification of TDS rates and capital gains tax rates, rationalisation of import duties, removal of angel tax, and a promise for further simplification by the next Budget; and the lower-than-expected fiscal deficit, which will further aid the crowding in of private capex and loans — again positive for corporate profits,” it said.