The market continued its rally with benchmark indices trading higher after Finance Minister Nirmala Sitharaman presented the Union Budget 2022 in Parliament on Tuesday. 

The market opened on a positive note ahead of the Budget and gained further in the first half. 

At 12:32 pm, soon after the Budget announcements, the BSE Sensex was trading at 58,909.09, up 894.92 points or 1.54 per cent. It recorded an intraday high of 59,032.20 and a low of 58,442.23. The Nifty 50 was trading at 17,571.55, up 231.70 points or 1.34 per cent. It recorded an intraday high of 17,622.40 and a low of 17,451.65.

Sun Pharma, Britannia, Tata Steel, IndusInd Bank and ICICI Bank were the top gainers on the Nifty 50, while IOC, Tata Motors, BPCL, ONCG and State Bank of India were the top laggards. 

While financials, metals, FMCG, IT and pharma gained in the post-Budget rally, auto and PSU bank stocks dragged. 

 

Union Budget 2022

The focus areas of the Union Budget 2022-23 include PM Gati Shakti, Inclusive Development and Energy Transition. There are eight engines of PM Gati Shakti, a key infra development initiative of the Modi-led government, the Finance Minister said. The PM Gati Shakti National Master Plan will also include infra development by States. The Budget also focused on transparency of financial statements and fiscal position, and this reflects the government’s intent.

The focus of the market, besides sector-specific announcements, were GDP growth numbers, fiscal deficit target and disinvestment plans as well as relief announcements on the taxation front .

As for key numbers, the revised fiscal deficit for FY22 stood at 6.9 per cent (against 6.8 per cent). Estimated fiscal deficit stood at 6.4 per cent of GDP for FY23. The Centre’s budgetary capital expenditure increased from Rs 5.5 lakh crore in FY22 to Rs 7.5 lakh crore for FY. The FM also said gross GST collections for the month of January 2022 is Rs 1,40,986 crore, which is the highest since the inception of the GST.

Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank said, “The Budget is broadly in line with our expectations. The government has continued its focus on infrastructure and rural demand. As expected, it has refrained from a sharp fiscal consolidation. While the fiscal expansion is expected to be pro-growth, the heavy supply is expected to worry the bond markets.”

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Service said, “Overcoming the temptation to garner some votes through populist proposals, the Finance Minister has presented a visionary economic document to boost economic growth.”

“By increasing the capex by 35.4 per cent to 7.5 lakh crore, thereby, targeting an effective capex of 10.7 lakh cr, the government has declared that it would be doing the heavy lifting to achieve 8 to 8.5 per cent GDP growth in FY 23. The government has balanced growth with welfare programmes for the poor with Rs 48,000 crore PM Awas scheme and Rs. 60,000 crore for tap water for the poor 3.8 lakh households,” added Dr Vijayakumar.

However, according to ICICI Direct, “A higher-than-expected fiscal deficit will keep the pressure on GSec yield, thereby, impacting treasury profits of PSU banks,” it said in a note. 

According to Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research, “The outlay for capex has been significantly enhanced by 35 per cent from Rs 5.5 lakh Cr to Rs 7.5 lakh Cr, which is more than double the levels in FY20. This will continue to boost the construction sector and generate jobs in the infrastructure sector.” 

Sectoral and broader indices

On the sectoral front, Nifty Private Bank was up over 2 per cent, while Nifty metal was up nearly 2 per cent. The Nifty Bank, Nifty Financial Services, Nifty FMCG, Nifty Pharma and Nifty Healthcare Index were each up around 1.7 per cent. Nifty IT was up around 1.5 per cent. 

Meanwhile, Nifty PSU Bank was down 0.94 per cent, while Nifty Auto was down 0.32 per cent. 

As for broader indices, Nifty Midcap 50 was up 0.47 per cent, while Nifty Smallcap 50 was up 0.37 per cent. The S&P BSE Midcap was up 0.47 per cent, while the S&P BSE Smallcap was up 0.44 per cent. 

The volatility index softened 5.83 per cent to 20.67 .

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