The union budget 2021 had a massive impact on the Indian markets today. The benchmark indices, which is Sensex and Nifty recorded the highest budget day gains in more than 2 decades.
Nifty was up 4.74% to 14,281.2 and Sensex was up 5% to 48,600.61.
Banking and realty indices were the topmost gainers on the bourses today. The budget had announcements for many sectors: real estate, steel, banking, insurance sector and more.
Read on to find out more on the announcements and how the markets reacted at the end of the trading session on budget day. Please note that all stock prices and movements in sectoral indices are as on February 1, 2021.
The healthcare industry welcomed the government’s increased allocation for the healthcare sector. Finance Minister Nirmala Sitharaman proposed Rs. 2,23,846 crore budget outlay for health and well-being for 2021-22, compared to Rs.94,452 crore in the current fiscal, registering an increase of 137%.
A new centrally sponsored scheme called PM Atma Nirbhar Swasthya Bharat Yojana will be introduced with an outlay of Rs. 64,180 crore over six years to develop primary, secondary and tertiary healthcare systems. This will be in addition to the National Health mission and will support 17,000 rural and 11,000 urban health care centres. The government will launch Mission Poshan 2.0 to improve nutritional outcomes across 112 aspirational districts.
The Urban Swachh Bharat Mission will also be implemented over the next five years. To tackle the problem of Air pollution, the Finance Minister allocated Rs 2,217 crores for 32 urban centres. Apart from this 35,000 crores have been allocated for Covid-19 vaccines and the government intends to provide further funds if needed.
- Nifty Pharma down 0.55%
- BSE Healthcare up 0.26%
Top Pharma Stocks by Market Cap:
- Sun Pharmaceuticals up 0.67% to Rs 590.15 per share
- Divi’s Labs up 2.78% to Rs 3,463.6 per share
- Dr. Reddy’s Labs down 3.79% to Rs 4,428.15 per share
- Cipla down 2.36% to Rs 806.4 per share
- Aurobindo Pharma up 1.79% to Rs 921.45 per share
For 2021-22, an outlay of Rs 5.54 lakh crores has been proposed by the Government. A professionally managed Development Financial Institution (DFI) for infrastructure financing will be set up and a sum of Rs 20,000 crores is being provided to capitalise this institution. A lending target of 5 lakh crores in the next 3 years has been set for this institution.
The National Infrastructure Pipeline (NIP) was launched with 6,835 projects, which has now expanded to 7,400 projects. MetroLite and MetroNeo will be introduced in Tier 2 cities and peripheral areas of Tier 1 cities. These are low-cost Metro projects. Kochi Metro, Chennai Metro Phase 2, Bengaluru Metro Phase 2A and B, Nashik and Nagpur Metros will get additional allocations. Debt financing of InvITs and Reits by foreign portfolio investors will be enabled which will help to fund infrastructure and real estate.
A national monetisation pipeline of potential brownfield infrastructure assets will be launched. NHAI and PGCIL will set up infrastructure investment trusts to attract global funds. Five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to NHAI InvIT.
The Union Budget offered a second chance to financially ailing power distribution companies (discoms) with the Finance Minister announcing a Rs 3,05,982 crore outlay for a revamped reform scheme for the discoms. The government will create a framework to allow consumers of electricity alternatives to choose from more than one distribution company. A comprehensive National Hydrogen Mission is also being launched for generating hydrogen from green power sources.
- Nifty Infra up by 4.94%
- BSE Infra up 5.56%
- Nifty Energy up by 2.65%
- BSE Energy up 2.57%
Top Infrastructure Stocks by Market Cap:
- Laursen and Toubro up 8.55% to Rs 1,448.85 per share
- Adani Ports up 6.48% to Rs 542.75 per share
- GMR Infrastructure up 4.19% to Rs 24.85 per share
- Rites up 1.58% to Rs 257.95 per share
- Dilip Buildcon up 4.19% to Rs 440.6 per share
Top Power Generating and Distribution Companies by Market Cap:
- Adani Green up 1.93% to Rs 1,024.25 per share
- Power Grid Corporation up 2.41% to Rs 188.9 per share
- NTPC up 3.43% to Rs 92 per share
- Adani Transmission up 4.64% to Rs 481.5 per share
- Tata Power up 5.97% to Rs 79.9 per share
Banking Finance Services and Insurance (BFSI)
The union budget 2021 announced a stressed asset resolution mechanism. In the run-up to the budget, the setting of a bad bank was doing the rounds as well. An Asset Reconstruction Company Ltd., which will be an asset management company, will be set up to consolidate and take over all the existing stressed assets and debt. This will eventually be disposed off to alternate investment funds (AIFs) and any other potential investor for relations of value.
The budget announced a further recapitalisation of banks to the tune of Rs 20,000 crores.
The BFSI sector was one of the top gainers today.
- BSE Bankex up 8.33%
- BSE Finance Up 7.49%
- Nifty Bank up 8.26%
- Nifty Finance 7.6%
- Nifty PSU Banks 7.83%
Top Bank Stocks by Market Cap
- HDFC Bank: Up 6.2% to Rs 1,476.75 per share
- ICICI Bank: Up 12.44% to Rs 603.8 per share
- Kotak Mahindra Bank: Up 5.17% to Rs 1,801.5 per share
- SBI: Up 10.14% to Rs 310.7 per share
- Axis Bank: Up 7.01% to Rs 709.35 per share
- IndusInd Bank: Up 14.71% to Rs 970.6 per share
Top Finance Stocks by Market Cap
- HDFC: Up 8.47% to Rs 2,579.25 per share
- Bajaj Finance: Up 6.84% to Rs 5,058.6 per share
- Bajaj Finserv: Up 11.45% to Rs 9,721.8 per share
- SBI Cards and Payment: Up 2.07% to Rs 1,006.5 per share
- HDFC AMC: Up 2.76% to Rs 2,955 per share
Top Insurance Stocks by Market Cap
- HDFC Life Insurance: Up 3.11% to Rs 699.05 per share
- SBI Life Insurance: Up 1.16% to Rs 874.5 per share
- ICICI Prudential Life Insurance Company: Up 1.76% to Rs 489.45 per share
- ICICI Lombard General Insurance: Up 3.79% to Rs 1,365.25 per share
The benefit of additional interest deduction of Rs 1.5 lakh to purchase affordable housing has been extended by one more year. Therefore the tax benefit will be applicable to affordable home loans taken till 31st March 2022, an extension from March 31, 2021.
This is over and above the Rs 2 lakh deduction available on the interest payment on housing loan subject to certain conditions.
Thus, the total deduction available to an individual taxpayer on the interest payment of a housing loan for buying an affordable house is Rs 3.5 lakh in a financial year.
- BSE Realty up 6.65%
- Nifty Realty up 6.31%
Top Stocks by Market Cap
- DLF: Up 10.26% to Rs 281.65 per share
- Godrej Properties: Up 5.14% to Rs 1,321.85 per share
- Oberoi Realty: Up 2.26% to Rs 538.85 per share
- Prestige Estate: Up 4.22% to Rs 278.8 per share
- Phoenix Mills: Up 7.66% to Rs 806.95 per share
Ease of Doing Business
There are certain measures introduced by the budget that may have had a positive impact on the market movement today.
- MSME allocation doubled to 15,700 crores.
- Tax audit limit increased to Rs 10 crores from Rs 5 crores. This has been done to improve the ease of doing business for micro and small enterprises (MSME).
- A new world-class fintech hub in GIFT city
- Allocation Rs 1,500 crores for promoting digital payments
- A new reconciliation mechanism for quick resolution of contractual disputes with Government/CPSES
- Separate framework for debt resolution of MSMEs.
Certain customs duty on steel will be reduced to 7.5% on semi, flat and long products of non-alloy, alloy and stainless steel. Duty on steel scrap will be exempted till March 2022.
Top Steel Stocks by Market Cap
- JSW Steel up 3.82% to Rs 380.85 per share
- Tata Steel up 5.84% to Rs 636.1 per share
- Hindalco up 6.56% to Rs 241.15 per share
- NMDC up 3.47% to Rs 108.85 per share
- Jindal Steel up 6.02% to Rs 277.5 per share
- SAIL up 10.42% to Rs 63.6 per share
The government has also introduced a few reforms in the agriculture sector. It has set the agriculture credit target of Rs 16.5 lakh crore for FY22, an increase of 10%. The provision for rural infrastructure development fund has been increased to Rs 40,000 crore from Rs 30,000 crores.
Subsidies in the sector:
- FY22 fertilizer subsidy at Rs 80,000 crore
- FY22 food subsidies at Rs 2.43 lakh crore
Top Stocks By Market Cap:
UPL: Down 4.74% to Rs 534.1 per share
PI Industries: Down 0.96% to Rs 1,999.25 per share
Coromandel International: Down 1.59% to Rs 831.5 per share
Bayer CropScience: Up 0.16% to Rs 5,381.8 per share
Sumitomo Chemical India: Up 2.17% to Rs 319.9 per share
The government is also imposing an agriculture infrastructure and development cess on a few items: