The share market reacted with caution to the Union Budget presented today, with the benchmark indices trading in a narrow range. The BSE Sensex opened at 61,245.77, up 157.45 points, while the NSE Nifty50 opened at 18,288.20, up 47.60 points. However, as the day progressed, the indices gave up their gains and traded in the negative territory.
The market was expecting a populist budget, but the finance minister’s focus on fiscal consolidation and growth-oriented measures seemed to have disappointed some investors. The lack of significant announcements on tax relief and stimulus packages for specific sectors also contributed to the market’s muted reaction.
However, some sectors, such as infrastructure and banking, saw significant gains, driven by the budget’s focus on infrastructure development and financial inclusion. The infrastructure sector, in particular, saw a significant boost, with stocks such as Larsen & Toubro, IRB Infrastructure, and GMR Infrastructure gaining up to 5%.
The banking sector also saw significant gains, driven by the budget’s focus on financial inclusion and the proposed increase in the limit for tax-free interest income on bank deposits. Stocks such as HDFC Bank, ICICI Bank, and Axis Bank gained up to 3%.
On the other hand, sectors such as IT and pharmaceuticals saw significant losses, driven by concerns over the impact of the budget on their profitability. The IT sector, in particular, saw a significant decline, with stocks such as Infosys, TCS, and Wipro losing up to 4%.
The pharmaceutical sector also saw significant losses, driven by concerns over the impact of the budget on their profitability. Stocks such as Sun Pharma, Cipla, and Dr. Reddy’s Laboratories lost up to 3%.
The auto sector also saw significant losses, driven by concerns over the impact of the budget on their profitability. Stocks such as Maruti Suzuki, Tata Motors, and Mahindra & Mahindra lost up to 2%.
The market’s reaction to the budget was also influenced by global cues, with the US Federal Reserve’s decision to keep interest rates unchanged providing a boost to global markets. However, concerns over the impact of the coronavirus on global economic growth continued to weigh on investor sentiment.
The Indian rupee also weakened against the US dollar, trading at 74.85, down 0.25% from its previous close. The weakness in the rupee was driven by concerns over the impact of the budget on the country’s fiscal deficit and current account deficit.
In terms of sectoral performance, the BSE Infrastructure index was the top gainer, up 2.5%, followed by the BSE Bankex, up 1.5%. On the other hand, the BSE IT index was the top loser, down 2.5%, followed by the BSE Pharma index, down 2%.
The market’s reaction to the budget was mixed, with some sectors seeing significant gains while others saw significant losses. As the market digests the budget’s implications, it is likely to see further volatility in the coming days.
Investors will need to keep a close eye on market developments and adjust their investment strategies accordingly. The budget’s focus on fiscal consolidation and growth-oriented measures is likely to have a positive impact on the market in the long term, but in the short term, the market may see further volatility. The market’s reaction to the budget was also influenced by the government’s decision to increase the fiscal deficit target for the current year. The government has increased the fiscal deficit target to 3.8% of GDP, up from 3.3% earlier.
The increase in the fiscal deficit target is likely to have a negative impact on the market, as it may lead to higher borrowing costs and inflation. However, the government’s decision to increase the fiscal deficit target is likely to provide a boost to economic growth in the short term.
In conclusion, the share market’s reaction to the budget was mixed, with some sectors seeing significant gains while others saw significant losses. As the market digests the budget’s implications, it is likely to see further volatility in the coming days. Investors will need to keep a close eye on market developments and adjust their investment strategies accordingly.
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