Budget euphoria fizzles out! Sensex 900 points off day's high, gives up 60K; Nifty tests 17,700​​

After Finance Minister Nirmala Sitharaman reduced income the tax burden and raised government capex outlay by 33% to Rs 10 lakh crore for FY24 on Wednesday, the domestic equity market welcomed the pro-growth Budget with the Sensex rallying over 1,200 points.

However, at 2 PM, the euphoria fizzled out as Sensex was trading off the day's high at 59,810.28 points, just 300 points higher than its previous close. Similarly, Nifty was testing 17,700 level.

With banks, financials, realty and auto stocks leading the charge, all sectoral indices were in the green zone. Private sector lender ICICI Bank was the top gainer in Nifty by rallying over 4%. Up 1.6%.

Shares of ITC slumped 6% after the government hiked the National Calamity Contingent Duty (NCCD) on cigarettes sharply by 16% in the FY24 budget. This is sharply higher than market expectations.
Dalal Street investors were left richer by Rs 2.24 lakh crore as the market capitalisation of all BSE-listed companies rose to Rs 272.47 lakh crore.

Exemptions under the new income tax regime will provide increased disposable income in the hand of salaried class which will help boost demand.

"A 33% increase in capital expenditure to Rs 10 lakh crore, the highest ever will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination," said Anand Rathi, Founder & Chairman, Anand Rathi Group.

The surge in capex spending, if achieved, will assure a significant multiplier effect on the overall medium term growth prospects of the economy, said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.

The overall reiteration on fiscal consolidation path along with inline market borrowings bodes well for the bond markets, she said.

In her Budget speech, Sitharaman's focus was strong on infrastructure, manufacturing, health, agriculture, green initiatives and inclusive growth.

"The Budget has put more money in the hands of the people through relief from income tax which to our mind is a very positive step. Budget leaving taxation on capital gains untouched is a big positive," said S Ranganathan of LKP Securities while rating the Budget 9 out of 10.

The government's fiscal deficit estimate of 5.9% of GDP has met D-Street expectations on fiscal prudence.

Samco Securities said stocks such as L&T, ABB India, Polycab, KEC International, Siemens stand to gain from the capex hike.

Auto stocks rallied after the Budget proposed raising of capital outlay and proposed spending to scrap old government vehicles while hotel stocks rallied up to 8% after Sitharaman said the promotion of tourism will be taken up on a mission mode.

"As the disposable income increases, FMCG sector gets a shot in the arm which are already battling inflation. BFSI sector also stands to gain as deposits and investments in insurance, mutual funds rise," said Sanjay Moorjani, Research Analyst, SAMCO Securities.