Budget 2024: Banking stocks mixed after FM proposed lower-than-estimated borrowings

Budget 2024: Banking stocks were a mixed bag in Thursday's trade (February 1) after Finance Minister Nirmala Sitharaman announced the Interim Budget. Nifty Bank settled 0.42 per cent higher at 46,188.65, and S&P Bankex was up 0.47 per cent at 52,245.9. On Nifty Bank, six stocks advanced and six declined, with PNB being the top gainer, rising over 4 per cent.

How did the budget announcement impact banking stocks? 

As per Zee Business Research, Finance Minister Nirmala Sitharaman proposed to borrow Rs 14.13 lakh crore by issuing dated securities to meet the revenue shortfall in the next financial year, starting on April 1. The market expected borrowings of Rs 15.6 lakh crore, which is 9.4 per cent lower than estimated.

This is lower than last year's gross borrowing estimate of Rs 15.43 lakh crore, which was the highest ever. The lower borrowing estimate for 2024–25 is on account of growing tax revenue and the government's resolve to meet its fiscal consolidation roadmap.

"The gross and net market borrowings through dated securities during 2024–25 is estimated at Rs 14.13 and Rs 11.75 lakh crore, respectively. Both will be less than that in 2023–24. Now that private investments are happening at scale, the lower borrowings by the central government will facilitate a larger availability of credit for the private sector," the FM said.

As regards the net borrowing estimates, Sitharaman, while presenting the Interim Budget for 2024–25, said it would be Rs 11.75 lakh crore during the next financial year. As a result, the government would make repayments of Rs 2,37,818 crore during the year.

Ravi Singhal, CEO of GCL Broking, believes that the fiscal deficit target is below 4 per cent which is good for banking stocks. Bank of Baroda is Singhal's top pick.

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