Interim Budget: Sensex, Nifty trade flat as FM’s speech concludes

• Benchmark indices slipped into red from green right after the Budget speech.
• The finance minister increased FY25 capex outlay by 11.1%.
• Rail stocks which have been buoyant in the morning trade, slipped into the red.

Finance Minister Nirmala Sitharaman increased the capex outlay for FY25 by 11.1% to ₹11.11 lakh crore in her interim budget speech on Thursday. The benchmark indices opened in the green in the morning, and have been volatile ever since the speech concluded.

As of 12:30 pm, indices were flat with Sensex down by 43 points, and Nifty down by over 13 points. Railway stocks like Jupiter Wagons, IRCON, IRFC which have been trading higher in the morning also slipped into red right after the speech. PayTM stock fell by 19.9% after the RBI barred it from accepting deposits on Wednesday.

Nifty Bank too has been volatile, Nifty Midcap has been down by 1.3% since the markets opened. Maruti Suzuki, Power Grid, Cipla, M&M and TCS are top gainers on Nifty, while Dr Reddy, ONGC, Ultratech Cement, L&T and Grasim were the top losers.

US benchmark indices closed in the red on Wednesday, after the Fed issued a slightly hawkish guidance on interest-rate cuts at its latest policy meeting. Tech heavy Nasdaq tumbled by over 2% after disappointing earnings from Google parent, Alphabet.

Indian stock markets have been waxing and waning at regular intervals for the last eight sessions, ahead of the budget. Experts say that markets are unable to find a direction ahead of the ‘vote-on-account’ budget.

Experts believe that the impact of the Union Budget on the equity market has reduced notably over the past few years. All the same they hope for a few announcements. “Even though the interim Budget is expected to be largely a vote on account with ‘no sensational announcements’ the PM’s statement yesterday that it will be a ‘blueprint of intent’ has aroused expectations that there will be some significant indications of what is likely to come in the full Budget and beyond,” Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Hopes for a capex push

Investors were hoping that the government will provide impetus to key policy reforms such as Atmanirbhar Bharat, Make in India, and the PLI scheme in FY25. After capex expanded by 35% last year, most expected a 10-12% rise in capex this year. Its focus is likely to continue to be on infrastructure like roads, water, metro, railways, defense, digital infrastructure, and green technologies.

“We expect key policy reforms, such as Atmanirbhar Bharat, Make in India, and the PLI scheme, to continue and receive further impetus in FY 25. There may be an increased emphasis on power, utilities, and renewables. Railways, infrastructure, and capital goods companies are poised to remain in the spotlight with higher capex spending,” says Pranav Haridasan, MD and CEO, Axis Securities.

Driving the rural economy

The government was also expected to give the rural economy a much needed push as it’s not fully recovered from the pandemic. Particularly because buoyant tax collections have kept India’s fiscal situation of FY24 in a good stead.

“We expect the government to stick to its path of fiscal consolidation, without compromising on quality of expenditure. In the wake of weaker monsoon and pressure seen in Rabi sowing season, focus will be on providing support to rural growth. Important schemes such as PM-KISAN, MGNAREGA, Housing for all, free food grains, will continue to hold significant importance,” said Sonal Badhan, economist at Bank of Baroda.

If the rural economy gets a boost, it will be a positive for FMCG majors like HUL, Marico, Dabur whose volume growth has been sluggish for the last few quarters. It will also aid Hero Motocorp, M&M, Bajaj and other auto players.

1)

$EXIDEIND.NSE $TATAPOWER.NSE The only major thing I could sense in the budget speech was the intention to increase EV charging points. This could be a solar-like push from the govt and can lead to higher growth of battery/power and EV stocks. Careful selection of market leaders that are currently available at reasonable valuations will be good long term investments. I would stay away from micro and small caps that are not financially strong, as these will get left on the wayside once consolidation starts.

— (@ajaykrishnan) February 01, 2024

2)

$NIFTY50.NSE 1. The government aims to enhance agri-food processing to boost farmer income. 2. The promotion of private and public investment in post-harvest activities is a key initiative. 3. A strategic plan is in the works to achieve self-sufficiency in oilseeds. 4. A program is being formulated to provide support to dairy farmers. Stock to Watch: $DODLA.NSE ; $AVANTIFEED.NSE ; $PARAGMILK.NSE ; $APEX.NSE

— (@MBA_INVESTMENTWALA) February 01, 2024