Indian benchmark Indices slipped into negative terrain after Finance Minister Nirmala Sitharaman concluded her interim budget speech in the Parliament. The BSE Sensex slipped as much as 167 points to hit a low of 71,585, and the NSE Nifty fell by 67 points to 21,659 levels. However, the market soon recouped losses and was trading near the baseline with positive bias.

The equity market maintained an upward trajectory during the presentation of the Interim Budget 2024 by FM Sitharaman in Parliament today. During the Budget speech, the 30-share Sensex gained as much as 399 points to 72,151, while the broader Niffty surged 107 to hit an intraday high of 21,833 marks.

Early today, the Sensex opened at 71,998.78, up 247 points higher against the previous closing level of 71,752.11, and the Nifty50 belled the day at 21,780.65, up 55 points compared to Wednesday’s closing mark of 21,725.70.

The top gainers on the BSE Sensex were Maruti Suzuki India, Power Grid Corporation of India, Mahindra & Mahindra, Tata Consultancy Services, and ITC. On the other hand, Larsen & Toubro, UltraTech Cement, Wipro, Tech Mahindra, and Bharti Airtel.

In her speech, the finance minister announced that the country's FY25 capital expenditure outlay has been raised by 11.1% to ₹11.11 lakh crore, at 3.4% of GDP. However, she reduced the Budget estimate for the fiscal deficit to 5.8% from FY24 (BE) of 5.9%.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, says that the hallmark of this interim Budget is its “fiscal rectitude” as the government prioritised fiscal consolidation over populism on the eve of general elections. “The fiscal deficit numbers of 5.8% in the revised estimates for FY24 and 5.1% for FY25 are better than the most optimistic expectations. This is very good news for the economy and consequently for the market.

“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," Vijayakumar adds.

Siddhesh Mehta, Research Analyst, Samco Securities, says, “The Finance Minister reports a significant milestone, citing a doubling of tax collections over the past decade. Notably, the current budget maintains the status quo in both direct and indirect taxation, including import duties. Companies may find this predictability beneficial in navigating their financial planning, fostering a more secure and sustainable business environment.”

Sector-wise, fertiliser stocks such as Southern Petrochemical Industries Corporation Ltd (SPIC), Aries Agro, Nagarjuna Fertilizers rallied up to 7% after FM extended application of Nano DAP on a large scale and in a systematic manner. “After successful adoption of nano urea, Nano DAP application on various crops will be expanded in all agroclimatic zones,” she says in her speech.

The market also reacted to the Federal Reserve’s policy announcement as the U.S. central bank left rates unchanged for a fourth consecutive time. The U.S. Fed kept its key policy rate unchanged at 5.25%-5.50%, citing that it would be appropriate to reduce the target range until the central bank gains greater confidence that inflation.

“In line with market expectations, the U.S. Federal Reserve left rates unchanged for a fourth straight meeting. However, there was a slight change in tone from the December meeting with the statement mentioning that the Fed does not expect rate cuts until it sees “greater confidence that inflation is moving sustainably toward 2%,” says Prashant Tandon, Senior Director, Listed Investments Client Advisory, Waterfield Advisors.

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