Budget 2019: Stock market sentiment to be upbeat on consumption boost, tax relief; top sectors to bet

By: |
Updated: February 1, 2019 6:11:36 PM

India Union Budget 2019: After stock markets cheered various announcements relating to middle class tax break and farmers' income boost in Budget 2019, experts point out that consumption related sectors are likely to do well.

Budget 2019: Rollback of LTCG tax or some relief on dividends (currently taxed thrice) would have been a welcome step and would have improved sentiment among investors, says Jatin Khemani.

Budget 2019: After stock markets cheered various announcements relating to middle class tax break and farmers’ income boost in Budget 2019, experts point out that consumption related sectors are likely to do well. “Overall, we find the budget to have struck a fair balance between populist measures, given its an election year, and fiscal discipline. The key focus has been clearly on middle-class salaried individuals and farmers. This would increase disposable income and be positive for all consumption related businesses,” Jatin Khemani, Founder, Stalwart Advisors said in a note to Financial Express Online.

Taking stock of the impact on stock market, Milan Vaishnav, CMT, MSTA noted that severe volatile moves were witnessed in the markets just like any other Budget day, he believes that the moves in the markets will be broadly guided by technical parameters. “Today, despite euphoric move after the speech, NIFTY did not move past the critical resistance area of 10950,” he added in a note to Financial Express Online. Once the overall Budget is digested the markets, it is set to react positively to it, he said.  “We will eventually see the NIFTY moving past the 10950 mark and testing 11200-11300 zones by elections,” he said.

Also read: Budget 2019: Modi govt woos farm voters; announces income support of Rs 6,000 per year

Sharing his view on the impact on stock markets, from a technical standpoint, Vaishnav said that with a focus on farmers, increased educational spends, and more income in the hands of end-users due to amended tax slabs,  certain sectors are seen rotating favourably in the markets. “Using tools like Relative Rotation Graphs (RRGs), we see sectors like Energy, Consumption/FMCG, IT and Pharma doing well and relatively out-performing the general markets,” said the expert.

Sharing his take, Ajay Bodke of Prabhudas Lilladher said that the Budget provides a massive boost to the primary engine of growth i.e. domestic consumption through income tax sops for nearly 30 million low-income taxpayers and 120 million marginal farmers. “Equity markets would rejoice with the force multiplying boost provided to sectors in domestic consumption like automobiles, consumer staples & durables, real estate, building materials, home improvement and retail-focussed banks & financials etc,”Ajay Bodke, CEO, Prabhudas Lilladher PMS said in a note.

While market participants were hoping for a STT rationalisation and DDT relief, Union Budget 2019 did not oblige in this regard.  “To industry at large, the budget remained a non-event; there is no clarity over stamp duty reform or the rationalization of STT. These two were the demands from the stock market at large,” Nikhil Kamath, Co-founder & Chief Investment Officer, Zerodha said in a note. Rollback of long-term capital gains tax or some relief on dividends (currently taxed thrice) would have been a welcome step and would have improved sentiment among investors, observed Jatin Khemani of Stalwart Advisors.

Do you know What is Receipt Budget, Securities Transaction Tax, Revenue Deficit, Centrally Sponsored Scheme, Non Tax Revenue? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Budget 2019: FM Piyush Goyal hands out hope to homebuyers, says GoM looking to extend GST benefits
2Budget 2019: Government broke the back of high inflation, says Piyush Goyal
3Union Budget 2019: Poor have the first right over nation’s resources, says FM