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Budget 2022 Market Impact: Infra, Banking, Auto, & More

14 May 2022

The union budget was presented in the parliament on Feb 1. Apart from the announcements in the budget, one factor that many people watch out for is the reaction of the stock markets to the budget. 

In this article, let’s have a look at how the markets performed on the day of the budget: 

The benchmark indices ended the day in the green. Sensex ended 1.46% up and Nifty was up 1.37% at the end of the Budget day. Auto, PSU Banks, and energy indices were the only indices that ended the day in the red.

Metal indices gained the most today, followed by FMCG, realty, and IT indices.

Here is a brief look at the specific sectoral budget impact on market and the relevant effect on the stock markets:

Auto Sector

The Finance Minister announced that the government will launch a battery swapping policy for electric vehicles. This could encourage private players to step up their investments. Further, the private sector will be encouraged to create sustainable and innovative business models for battery and energy for improving the efficiency of the EV ecosystem. 

Auto stocks were largely down at the time of writing this. Nifty Auto was down 0.75% at the end of the day.

Top 5 auto stocks as per market cap:

Telecom Industry 

As per the budget, spectrum auctions will be conducted in FY22-23 for the rollout of 5G. 

Further, a Scheme for design-led manufacturing will be launched for the 5G ecosystem as part of the Production Linked Incentive (PLI) scheme. This is expected to enable affordable broadband and mobile communication in rural and remote areas. 

Telecom stocks observed a mixed reaction with Airtel’s stock down 0.86%, and Vodafone Idea’s stock up 0.47% at the end of the day.

Top Telecom stocks as per market cap:

Agriculture

A rationalized scheme to increase domestic oilseed production will be brought in to cut down imports. 

To reduce India’s dependence on the import of oilseeds, a comprehensive scheme is to be implemented by the Government to encourage domestic oilseed production. 

In a bid to increase the irrigation benefits to the farmers, the budget proposed the Ken Betwa river linking project worth Rs 44,605 crore. The FM also mentioned that natural and organic farming will be promoted along the Ganga river corridor. 

Agriculture stocks recorded a mixed response. 

Real Estate

In 2022-23 80 lakh houses will be completed for the eligible beneficiaries of PM Awas Yojana, both rural and urban. For this purpose Rs. 48,000 crore is allocated in the budget.

The Central Government will work with the State Governments for reducing the time required for all land and construction-related approvals, for promoting affordable housing for the middle class and Economically Weaker Sections in urban areas. 

The budget also mentioned that the Government shall work with the financial sector regulators to expand access to capital along with a reduction in the cost of intermediation.

Top real estate stocks as per market cap:

Infrastructure – Roadways, Railways

National highway network to be expanded by 25,000 km in FY 22-23. 

Desh stack e-portal to be launched to promote digital infrastructure. 

PM Gatishakti masterplan for expressways will be formulated in the next financial year. Cargo Terminals, about 100 of them, under PM Gati Shakti to be set up in next three years.

Shares of IRCTC and IRCON surged over 4% during trading hours today.

Handicrafts, Textiles

To incentivize exports, exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings, and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles, and leather garments, leather footwear, and other goods.

Over 350 custom exemption entries have been proposed to be phased out. These include exemption on certain fabrics for which sufficient domestic capacity exists.

Most of the top textile and apparel companies’ stocks showed a positive response.

Top textile stocks by market-cap:

Shrimp

Duty is being reduced on certain inputs required for shrimp aquaculture so as to promote its exports.

All the top aquaculture companies’ responded positively. 

Top Aquaculture stocks in India:

Tourism, Travel, and Leisure

The Emergency Credit Line Guarantee Scheme was unveiled to aid the Micro, Small, and Medium Enterprises (MSMEs) sector in view of the economic distress caused by the pandemic.

With this budget, the ECLGS will be extended up to March 2023 and its guarantee cover will be expanded by 50,000 crores to a total cover of 5 lakh crore, with the additional amount being earmarked exclusively for hospitality and related enterprises.

Jewelry

To facilitate the export of jewelry through e-commerce, a simplified regulatory framework shall be implemented by June this year. 

Duty on unpolished diamonds will be reduced to 5%.

Top Jewelry stocks by market cap

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