Nifty, Sensex remain unenthused by Interim Budget 2024 as bonds rally

• Budget is a non-event for equity markets, say experts, as indices traded flat with negative bias.
• PSU Bank stocks rallied as bond markets cheered FM’s fiscal consolidation path.
• Railway stocks which gained ahead of the speech, closed in the red.
  

India’s Interim Budget 2024 did not enthuse the stock markets on Thursday, even as the finance minister increased FY25’s capital outlay by 11.1% to ₹11.11 lakh crore. The benchmark indices traded flat for the most of the session. Sensex fell by 100 points and Nifty by 28 points as they did not find any cues for upward march.

Almost all the sectoral indices closed in the red except banks, especially PSU banks. Bond markets cheered and their yields came down sharply as FM set the fiscal deficit of FY25 at 5.1% of GDP.

It also triggered buying in PSU banks with Punjab Sind Bank going up by 7%. UCO Bank and Indian Overseas Bank also went up around 6% each.

"As expected, VIX has cooled off after the budget event which primarily has been a non-event for most of the market except PSU Banks and auto stocks which have seen most of the buying action. Nifty still trades near to its resistance area of 21,750-21,800 along with dominant shorts in index futures from FIIs. Bulls have to clear this area for any further action on the upside,” said Rahul Sharma, head of technical and derivatives research, JM Financial Services.

The rest of the market moved on non-Budget cues. Auto stocks were also amongst those closed in the green as they released sales data. Maruti announced its earnings on Wednesday, and was one of the top gainers on Nifty; along with Cipla, Eicher, Power Grid and SBI Life. PayTM was locked in the lower circuit as RBI imposed restrictions on it on Wednesday.

Infra & realty flat, rail stocks in the red

The FM touched up on most infrastructure projects including rural housing and solar power. She also announced three railway economic corridors — energy, mineral and cement corridors; port connectivity corridors, and high traffic density corridors.

“The announcement in the Union Budget 2024 regarding the upgrade of 40,000 regular rail bogies to Vande Bharat standards marks a significant milestone in India's railway modernization journey,” said Vivek Lohia, Managing Director, Jupiter Wagons.

Experts also see many positive cues in the Budget for sectors relating to infrastructure and construction. "The boost to housing is another important proposal from the market perspective since this will benefit industries like cement, steel and all construction related segments," said Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

While companies and experts are impressed with the announcements, infrastructure and real estate stocks traded flat. Rail stocks like Jupiter Wagons, Ircon, IRCTC, IRFC and RVNL which traded in the green ahead of the budget announcement, fell into the red after the speech.

The Nifty Midcap Index has also been trading with a negative bias since the morning, closed 0.6% below on Thursday. Most sectors which have been in the overbought range has been profit-booking, say experts.

“Nobody was expecting any major announcement in this Budget and hence we saw a range-bound trend with a negative bias. Global markets too were subdued and hence select profit-taking was seen in telecom and realty stocks,” said Prashanth Tapse, senior VP of research at Mehta Equities.

Interim Budget 2024 Highlights: 1} This Budget is dedicated to above sectors Defence (6.2Lac Cr), Road Trans & Highways (2.78 lac Cr), Railway (2.55 Lac Cr) 2} According to this Railway stocks, Infra development stocks & defence stocks will be benefited. But many of the above already gave a good rally so investors can wait for correction and then buy in dips. 3} PMAY scheme for 2Cr Houses, so real estate stocks will be benefited $IRFC.NSE $TEXRAIL.NSE $HAL.NSE $IRB.NSE 4} $NIFTY50.NSE View -) after rally Healthy correction needed for long bull run. Sell (Bearish view) Spot CMP 21750 For 21350-21200-20800 SL 22040.

— (@mundadaram) February 01, 2024