What appealed most to the stock market was the absence of moves like wealth tax or increase in LTCG on equity investments in Budget 2021, said analysts
Indian stock markets surged today with Sensex surging over 2,300 points to 48,600 after the finance minister announced a slew of measures to revive the pandemic-hit economy. The NSE Nifty 50 surged 4.7% to 14,281. This marked the Nifty's best daily performance on a budget day since at least 1996, according to Refinitiv data.
Finance Minister Nirmala Sitharaman proposed a vehicle scrappage policy, recapitalisation of public-sector banks and divestment of some state-owned lenders, aiming to bolster an economy that plunged into its deepest recorded slump amid the virus outbreak.
Among stock sub-indexes, the Nifty Auto index climbed 4.2%, while the Nifty PSU Bank index, which tracks state-run lenders, jumped 7.8% after Sitharaman said India would set up an asset reconstruction company to take over toxic assets. Gains in ICICI Bank and IndusInd Bank after quarterly earnings lifted the Nifty Bank index 8.3% to an all-time closing high.
Here are 10 updates from Indian markets:
1) "What appealed most to the stock market was the absence of moves like wealth tax or increase in LTCG on equity investments," said Amar Ambani, Senior President & Institutional Research Head at Yes Securities.
2) “The Budget rightly decided to focus on economic growth by raising expenditure and allowing for a wider fiscal deficit in these pandemic times. Besides the widely expected allocation increases to housing, infrastructure, health and textiles, the move to curb prolonged tax scrutiny and firm mindset shown to privatise certain PSUs, creation of ARCs for bad loans and monetise government land banks are steps in the right direction," he added.
3) Devang Mehta, Head Equity Advisory, Centrum Broking on Budget 2021, said: "Going with a sharp correction into the budget, the street was enthused by the absence of negatives and an attempt to be focused on robust growth for key sectors & in turn boost economic growth."
4) "Hats off to the FM for sticking to her promise of a budget that will be remembered for 100 years . A budget with no changes in direct taxes will certainly be remembered for years to come . Equity market will be enthused with no tinkering in capital gains taxes or STT or any form of Covid tax," said Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services.
5) "The proposals to privatize 2 public sector banks and one general insurance company is noteworthy as is increase in FDI limit in Insurance to 74%. The much awaited proposal to set up a DFI should boost capex in the coming years . To summarise the revival in the economy seen in the last 4-5 months will be further enhanced with the various budget proposals. Tax buoyancy , successful divestments and quick monetization of operating infrastructure assets remain a key to achieving the fiscal deficit target of 6.8 % for FY 21-22," he added.
6) The government on Monday announced the creation of a new Development Finance Institution (DFI) to spearhead its investment into India’s physical infrastructure space.
7) Presenting the Union Budget for 2021-22, finance minister Nirmala Sitharaman said the government will capitalise the DFI with ₹20,000 crore, allowing it to leverage debt of up to ₹5 lakh crore to provide much-needed financing to the capital-starved sector.
8) Global markets also rose today. European shares rose today, bouncing from their worst weekly decline since October.
9) "Budget called for increased government spending to revive the economy. There was an infrastructure push in the budget, focussing on development finance institution and asset monetization to fund the infra projects. Privatization of PSBs was another bold announcement," said Deepthi Mathew, Economist at Geojit Financial Services.
10) "Positively, there wasn’t any increase in taxes, even when the fiscal deficit figures are projected at a higher range."