Indian benchmark indices rose on conclusion of Finance Minister Arun Jaitley’s Budget speech, as he did not increase the holding requirements on equity shares for long-term capital gains tax exemption, against expectations.
BSE Sensex was trading up 1.04% at 27,944.51 points, and NSE Nifty was up 0.93% at 8,640.55 points. Further, the holding period for property for claiming long-term capital gains exemption has been proposed to be reduced to two years from three years now, making more money available at the hands of investors to put into other financial securities. “This was the least volatile budget that I have seen in 30 years,” veteran investor and BSE member Ramesh Damani said in a chat on CNBC TV18. “The indices were broadly flat for the entire speech,” he added.
Damani said the focus of the markets will now shift to the US policies, and markets will look towards global developments. Jaitley tried to balance the requirements of increasing public spending in order to spur the economy and keeping the fiscal deficit in check. He has set a target of limiting fiscal deficit for the next financial year 2017-18 at 3.2% GDP, relaxing it slightly from 3% as was mandated in the FRBM Act. At the same time, Jaitley’s budget increased spending in rural areas and infrastructure, and specially providing major impetus to low-cost housing sector.
Housing, Automobile, FMCG shares surged on the back of the Budget’s focus on increasing the spending power in the rural areas. Bank stocks gained on the announcement of Rs 10,000 crore infusion into the PSU lenders in the next fiscal year. Capital Goods and Infrastructure shares soared on higher than expected allocation to infrastructure at a record Rs 3.96 lakh crore.
Jaitley, in his Budget speech, also made it easier for Foreign Direct Investments to flow into the country with proposed abolition of the Foreign Investment Promotion Board. He also said that further liberalisation of the FDI policy is under consideration.