Budget for stock markets: Doyens of Dalal Street laud announcements, see positives for equities

Union Budget 2021: This was for the first time that a Budget speech by Nirmala Sitharaman has resulted in Bulls running the show on Dalal Street.

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Sensex recorded one of its most significant intra-day rallies today as it jumped 5% while Nifty 14,200 levels.

Union Budget 2021: Sensex and Nifty recovered almost half the losses they had suffered in the last six trading sessions after Nirmala Sitharaman unveiled her Union Budget. This was for the first time that a Budget speech by Nirmala Sitharaman has resulted in Bulls running the show on Dalal Street. Although there were no sops, stock markets reacted positively on no change in taxes, bank privatisation, and the boost to the infrastructure space. Sensex recorded one of its most significant intra-day rallies today as it jumped 5% while Nifty 14,200 levels. Here’s what doyens on Dalal Street make of today’s budget announcements.

Nilesh Shah, Group President & MD, Kotak Mahindra Asset Management Company –

“Growth-oriented budget will support the equity market. Asset Monetization, Strategic Divestment, Auto Scrappage policy are positive for the market. Fixed income market will look forward to RBIs monetary policy as the gross borrowing program was little on the higher side. The budget has laid the foundation for growth beyond FY22 through selective protection to domestic industry and encouragement via PLI scheme.”

Motilal Oswal, MD & CEO, Motilal Oswal Financial Services

“The FY22 budget has been much better than the market’s expectations. The feared and anticipated measures around Covid-Cess/higher capital Gains tax/Wealth Tax etc did not materialize. This will provide a huge relief to market and economy and help in sustaining the buoyant sentiments in the economy. All in all, a very good budget which avoids the pitfalls of raising taxes and at the same time provides a boost to the CAPEX/infra spends in the economy.”

Vijay Chandok, MD & CEO – ICICI Securities

“The Union Budget has set the foundation for the lifting of Indian economy from under US$ 3 trillion to US$ 5 trillion. The Budget focusses on making India Atmanirbhar by investing big in infrastructure, manufacturing and healthcare, to be aptly funded through higher fiscal deficit, in a benign interest rate scenario. The enhanced capex for Infra and manufacturing measures are likely to be key in generating overall demand as well as drive employment generation. Additionally, measures to strengthen domestic financial sector through capitalization of PSU banks, proposal to set up a Development Financial Institution, and stabile direct and indirect taxes are likely to provide the much desired impetus to growth and equity markets, post-Covid induced economic pain.”

Dhiraj Relli, MD & CEO, HDFC securities-

“The FM has delivered a unique Budget, wherein all the right measures have been proposed to speed up growth. The move of rationalization of spends, minimal changes to the direct and indirect taxes and no additional taxes will be well received. Higher spending will kickstart a virtuous cycle of growth. The expansion in spending will be funded by higher borrowings which has the potential to create an upward pressure on inflation and interest rates a few months down the line. We believe that the RBI will be in sync with the Govt and both will take necessary action to prevent this happening.”

B Gopkumar, MD & CEO, Axis Securities

“The FY22 budget has turned out to be a landmark budget with the government meeting the sky-high expectations of equity markets and the general public. The focus of the government is clearly on spending to revive the economy without major changes in the taxation structure. The government is doing quality spending with a focus on infrastructure, health care, and key social programs. The government’s borrowing also seems quite reasonable which indicates the budget is quite well balanced. The proposals for the financial sector which include privatization of public banks and asset reconstruction company are also significant positives for the financial sector. Overall, the budget has checked most of the boxes and will help the economy.”

Amar Ambani, Senior President and Head of Research – Institutional Equities, YES SECURITIES

“Equity market was most thrilled with the absence of some nightmares like the introduction of wealth tax or raising LTCG tax, especially given that this was a challenging year on the revenue front for the government. The FM’s apt deviation from the path of fiscal consolidation to support growth has been well-taken. What the market also realized is the massive front-loading of expenditure for the rest of 2020-21, which will have a positive ripple effect on the economy. The stock market can come to terms with slightly higher cost of capital, which will be offset by faster growth momentum and continued foreign portfolio flows.”

Jaspal Bindra – Executive Chairman, Centrum Group on Budget 2021 –

“Budget 2021 struck the perfect balance between maintaining investor sentiment, reducing fiscal deficit, boosting job creation and increasing Government spending. Though direct taxes remained unchanged, a commitment to simplification and dispute resolution was welcoming. On the expenditure side, the Budget met expectations. With a slew of key divestments in place, increase in FDI limits, an asset monetization pipeline, planned increased borrowings and the proposed LIC IPO, the Government is building up the arsenal it needs to keep inflows in place as well. Liquidity pressures will need to be kept under check owing to higher deficit and proposed increase in borrowings.”

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