The stock market collapses after Finance Minister Nirmala Sitharaman declares the Union Budget 2024.
The rupee hits record lows as the government hikes taxes on derivatives trading and capital gains, causing stock markets to plummet. At 24,225 and 80,024, respectively, the NSE Nifty 50 and S&P BSE Sensex saw corresponding declines of almost 1%.
On Tuesday, the government’s proposal to increase the tax on capital gains and derivatives trading caused the Indian stock markets to plummet sharply. The S&P BSE Sensex and NSE Nifty 50 both had a 1% decline, closing at 24,225 and 80,024, respectively. The value of the Indian rupee fell to 83.69, a record low compared to the US dollar.
After the unexpected election outcome on June 4, Sensex and Nifty managed to weather the storm and even prosper. Now, however, they must deal with another unsettling development: the Union Budget. The Sensex sank to 1,278 points when Finance Minister Nirmala Sitharaman unleashed a tax bombshell, but this just served to refocus attention on the Budget’s emphasis on fiscal prudence and growth.
The increase of STCG to 20% and LTCG to 12.5% is seen as a severe blow by the markets. In the short run, we should prepare for a negative response, according to Citrus Advisors founder Sanjay Sinha.
Analysts speculate that higher capital gains may cause market values to stabilize at current levels as sectoral performance rotates toward more balance.
Exceptions despite a sharp fall.
Top Gainers: Sectoral Performance.
Tuesday’s exception has been consumer stocks, which rose 2% on the announcement by the government that 1.52 trillion rupees will be allocated to agricultural and related industries. Stocks in the agriculture sector, such as Dhanuka Agritech, Mangalam Seed, and Kaveri Seeds, increased by 4.4% to 10.5%.
After the government promised financial help for the fishing industry, stocks in the industry saw increases of 4.3% and 2.3%, respectively, in Avanti Feed and Coastal Corp.
Budgetary consolidation and an emphasis on job creation are the main themes, aside from the tax shock.
Rahul Singh, as part of Tata Asset Management, stated that although the budgeted splurging on infrastructure, rural development, and agriculture has not changed from the interim budget, it strikes a careful balance between boosting rural economic growth, increasing agricultural productivity, and maintaining the priority of infrastructure spending considering the shortfall of the current fiscal year.
ITC shares are uptrending.
Among all Sensex equities, ITC has the greatest win rate on budget days. However, the company’s lackluster performance over the last year may have caused lakhs of retail investors on Dalal Street to remove it from their watchlist.
IndusInd Bank has had the second-greatest performance on budget days, with an average return of 2.5% on D-Day in addition to an 80% win rate on its shares. As HDFC Bank, TCS, and Nestle have had a 70% win rate, its competitor Kotak Mahindra Bank has experienced eight out of ten budget days in the green.
Ministry-wise budget allocation (in Lakhs Crores)
Proportions of expenditure, the sector’s wise focus, in yesterday’s budget presentation (from highest to lowest).
- DEFENCE (4.54)
- RURAL DEVELOPMENT (2.65)
- AGRICULTURE and ALLIED ACTIVITIES (1.51
- HOME AFFAIRS (1.50)
- EDUCATION (1.25)
- IT and TELECOM
- HEALTH
- ENERGY
- SOCIAL WELFARE
- Commerce and Industry.
Defense stock to climb high after Budget 2024.
The government’s union budget 2024 allocation to the defense industry on Tuesday, which is Rs 4.54 lakh crore for FY2024–2025 (a considerable decrease from Rs 6.21 lakh crore authorized in the February interim Budget), did not excite D-Street, which had made significant bets on the sector.
In the context of historically high stock prices, defense companies continue to be a safe investment option, according to a letter from Asit C. Mehta Investment Intermediates. According to the letter, FM Sitharaman provided the Ministry of Defense with a large share of the budget—roughly 13.04%—of Rs 6.21 lakh crore during the interim budget briefing in February.
A sharp fall of the stock market.
Top Losers: Sectoral Performance.
Consequently, equities had an intraday decline of up to 10%; nevertheless, they were able to reduce their losses by the time of close.
Hindustan Aeronautics Limited (HAL), a multibagger PSU stock, fell 10% to Rs 4,510, the day’s low. A 10% intraday decline was also seen by Bharat Dynamics and Mazagon Dock Shipbuilders.
Over the past 12 months, defense equities have witnessed a robust advance with multibagger gains. Multibagger gains are being produced by stocks such as Zen Technologies, Bharat Heavy Electricals (BHEL), HAL (157%), and Bharat Dynamics (153%).
