Indian equities end flat with a negative bias on Budget day; Bank Nifty closes below 52,000

Indian equities ended flat on the Budget day, recouping most of the day’s losses, as the sentiment took a knock after FM Nirmala Sitharaman in her 7th consecutive session tinkered and hiked capital gains tax rates which were largely on unexpected lines. Experts opined that these decisions could have been deferred for subsequent years.

At the close, Nifty ended with a cut of 0.13 per cent or 32.7 points at 24,476.55, while the BSE 30-scrip index Sensex closed 0.01 per cent or 73.04 points lower at 80,429.04. While the high beta Bank Nifty index ended sharply lower below 52,000 levels, for the first time in nearly a month. Much of the losses on the index are contributed by banking names including HDFC Bank, SBI, Axis Bank and ICICI Bank among others. Meanwhile, broader markets underperformed the headline indices and ended lower, with Nifty Midcap 100 cracking 0.6 per cent at the close. 

Sectorally, indices closed on a mixed note, with FMCG and Consumer Durables stocks turning as top performers logging gains of over 2 per cent each. While laggards were from Realty, banking, financial services, metal and energy pack.

Deepak Ramaraju, Senior Fund Manager, Shriram AMC says the budget has not been a big bang budget in terms of announcements or reforms. The government has tried to strike a balance between social reforms, growth, fiscal prudence and coalition partners. Special packages to Andhra Pradesh and Bihar have been provided in terms of industrial corridors, infrastructure push and financial support for key projects. This ensures the continuity of the coalition. The fiscal prudence is improved and the fiscal deficit is reduced to 4.9% of the GDP from 5.1%. The borrowing is pegged to Rs 14 L Cr which is less than last year. This is positive for the overall economy.

Hike in short-term capital gains and long-term capital gains have been sentimentally negative for the equity markets. This has resulted in short-term selling pressure. However, this can be the beginning of reforming the capital markets and curbing retail participation in the F&O segment. We can expect more measures in the F&O space in the days to come.