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Indian equity benchmarks ended Saturday’s session flat, as a decline in infrastructure stocks offset gains in consumer-facing stocks, which rose on optimism that the cut in income tax (I-T) would boost personal consumption.
In intraday trade, the Sensex hit a high of 77,899 and a low of 77,006, as investors processed a series of announcements made by the finance minister.
The Sensex finished the day almost unchanged at 77,506, while the Nifty 50 ended at 23,490, down by 19 points, or 0.08 per cent, during the special trading session.
To boost domestic demand, the Union government exempted individuals earning up to Rs 12 lakh a year from paying any I-T, raising the threshold from Rs 7 lakh. The I-T exemption limit will be Rs 12.75 lakh for salaried taxpayers due to a standard deduction of Rs 75,000. Additionally, tax rates were adjusted to benefit taxpayers across the board, aiming to boost household consumption and investment.
Consumer-facing stocks rallied on the expectation that tax cuts would leave more disposable income for spending. ITC, which rose 3.3 per cent, was the biggest contributor to Sensex gains, followed by Zomato, which surged 7.2 per cent and was the best-performing Sensex stock. The BSE FMCG index, which includes a range of consumption stocks from cigarette to snack makers, rose 2.9 per cent, its biggest single-day gain since June 6, 2024.
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Retail chain Avenue Supermarts’ stock rose 9.6 per cent, while Trent, which owns brands like Zudio and Westside, gained 7.5 per cent. Shares of Havells, a manufacturer of electrical goods and home appliances, rose 5.7 per cent. Liquor firms Radico Khaitan and United Spirits also saw gains of 9.4 per cent and 5 per cent, respectively.
“The learnings from the 2024 election verdict have been kept in mind, and the NDA 2 template of heavy capital expenditure (capex) has been firmly shelved. The government has realised that it needs to be pro-poor, pro-SMEs, and pro-middle class,” said Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers.
U R Bhat, co-founder of Alphaniti Fintech, noted that the government has incentivised sectors that might benefit from a US-China tariff war. “The composition of China’s exports to the US includes toys, leather goods, and electronic goods, and the Budget has given incentives to these sectors. The tax cut will put more money in the hands of the middle class, likely impacting consumer-centric sectors where the slowdown was evident,” he said.
To balance the revenue loss of Rs 1 trillion due to tax exemptions and cuts, the government modestly increased its capex from Rs 10.18 trillion in 2024-25 to Rs 11.21 trillion in the next financial year. As a result, shares of Larsen & Toubro declined by 3.4 per cent, making it the biggest drag on the Sensex. Cement manufacturers, whose fortunes are tied to infrastructure projects, also saw declines, with UltraTech falling by 2.3 per cent and Ambuja Cements by 2.2 per cent.
BSE-listed firms’ total market capitalisation declined by Rs 20,000 crore to Rs 424 trillion.
Total cash volumes on Saturday reached Rs 1.08 trillion, higher than the average monthly cash volume in January of Rs 1.01 trillion. Foreign portfolio investors (FPIs) were net sellers to the tune of Rs 1,327 crore. In January, FPIs sold shares worth Rs 86,367 crore, the second most during a calendar month.
