Interim Budget Keeps Markets Buoyant

The power and metal sectors have experienced robust gains, thanks to the sectoral boost provided in the budget 

The domestic indices experienced a tumultuous fortnight leading up to the interim budget on February 1, 2024. Despite consecutive sessions of sharp rises and falls, the BSE Sensex and Nifty 50, the benchmark indices, ultimately concluded the period with gains of 0.56 per cent and 1.07 per cent, respectively. The broader indices sustained growth with the BSE Mid-Cap index gaining 1.89 per cent and the BSE Small-Cap index outperforming others with gains of 3.17 per cent. The interim union budget prioritises both economic growth and inclusivity while also focusing on fiscal consolidation. [EasyDNNnews:PaidContentStart]

The government has announced an 11.1 per cent rise in capital expenditure, totalling ₹11.11 lakh crore. While the major indices have shown minimal reaction to the budget developments, sectoral indices such as BSE Power, BSE Oil and Gas and BSE Metals have experienced substantial buying interest starting from one week before the budget day due to expectations of a budgetary boost and overall optimism within the sector. During the past fortnight, the power sector has notably benefitted, with the sectoral index BSE Power climbing 8.73 per cent. 

The emphasis on rooftop solar power generation is geared towards providing free electricity of up to 300 units monthly for one crore households, paving the way for a significant upturn in solar and renewable energy stocks. Shares of metal companies have been experiencing a strong rise, driven by positive announcements related to infrastructure, real estate, defence and railways. These announcements are certain to foster optimism within the metals industry, considering the extensive use of iron, steel and other metals in these areas. 

The automotive and healthcare sectors also experienced significant gains. Conversely, investors exerted significant selling pressure on the FMCG and real estate sectors. Over the last two weeks, foreign institutional investors (FIIs) were net sellers, whereas domestic institutional investors (DIIs) transitioned to net buyers. FIIs registered a significant net outflow of ₹14,748 crore, while DIIs bolstered the market with a net inflow of ₹19,085 crore during the same period. In another noteworthy development, the shares of Zee Entertainment Enterprises Ltd. plummeted by over 30 per cent subsequent to the cancellation of the anticipated mega-merger with Sony Pictures Networks India. 

The largest insurance business in India, LIC has been granted approval by the Reserve Bank of India (RBI) to acquire up to a 9.99 per cent stake in the country’s largest private sector bank, HDFC Bank. This news has helped to limit any downside in the shares of the bank. Meanwhile, the shares of One 97 Communications Ltd (Paytm) plunged significantly after consecutive lower circuits, triggered by the RBI’s directive to Paytm Payments Bank to halt all banking services including deposit acceptance, top-ups and fund transfers within a month.

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