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Indian equities cheered Finance Minister Nirmala Sitharaman's budget announcements, not only snapping a six-day losing streak, but also posting their best single-day gain since April last year.
The S&P BSE Sensex ended 5% higher at 48,600 while the NSE Nifty 50 index gained 4.7% to end at 14,281. Both benchmarks saw their best budget-day gain since the Union Budget of 1997, when they had gained over 6% each. 45 out of the 50 index constituents ended with gains while four of them saw double-digit gains.
Among the sectoral indices, the Nifty Bank index gained over 2,500 points or 8.3% to end at a record high of 33,089. The Nifty PSU Bank index saw its best single-day gain since March last year, ending with gains of 7.8%.
Other sectoral gainers were the Nifty Auto index, which gained 4.2% and the Nifty Metal index which saw gains of 4.8%.
The Nifty Pharma index was the only sectoral laggard in today's session, ending 0.5% lower.
Broader markets too saw gains but were modest in comparison to the benchmarks. The Nifty Midcap index gained 3.3% while the Smallcap index rose 2% at the close of trade.
The India Volatility Index fell the most in two months, ending 8% lower at 23.32.
1,357 stocks on the NSE ended with gains while 567 stocks posted losses.
Shares of Titan Company Ltd., Manappuram Finance and Muthoot Finance rose in today's session after Finance Minister Nirmala Sitharaman in her budget speech proposed to lower the import duty on Gold and Silver from 12.5%.
The government has also imposed a 2.5% Agri Infra Cess on Gold and Silver imports.
#Budget2021 | Benefit of tax treaty to apply to determine rate of TDS on payments to FIIs.
— BloombergQuint (@BloombergQuint) February 1, 2021
Live blog: https://t.co/IiOiIv44XI pic.twitter.com/E5WJ263vRb
The government has imposed an Agriculture Infrastructure and Development Cess of Rs 2.5 per litre on Petrol and Rs 4 per litre on Diesel in the Union Budget.
Details in the budget document reveal that the special excise duty on petrol was cut to Rs 11 per litre from Rs 12 per litre earlier while basic excise duty was cut to Rs 1.58 per litre from Rs 2.98 per litre.
Similarly, the special excise duty on diesel was cut to Rs 8 from Rs 9 per litre while basic excise duty was cut to Rs 1.8 per litre from Rs 4.83 per litre earlier.
Shares of Indian Oil are trading 1.6% higher at Rs 94.75 while those of BPCL and HPCL pared gains to trade little changed.
Indian benchmark Nifty 50 and Sensex indices had gained 4.3% on Feb. 1, 2001.
In order to rationalise taxation of Unit Linked Insurance Plans, Finance Minister Nirmala Sitharaman proposed to allow tax exemption for maturity proceeds of the ULIP having an annual premium of up to Rs 2.5 lakh.
"However, the amount received on death shall continue to remain exempt without any limit on the annual premium. The cap of ` 2.5 lakh on the annual premium of ULIP shall be applicable only for the policies taken on or after February 1, 2021," the minister said.
Further, in order to provide parity, the nonexempt ULIP shall be provided same concessional capital gains taxation regime as available to the mutual fund.
As per a Jefferies report on January 15, 2021, ULIPs comprised of 65% of ICICI Prudential's product mix.
Shares of ICICI Prudential gave up gains of as much as 6% to fall as much as 0.7% to Rs 477.7.
Finance Minister Nirmala Sitharaman today revealed that fiscal deficit for FY21 expanded to 9.5% of the GDP. The government is further targetting a fiscal deficit of 6.8% for FY22.
Agri Infra Development Cess on small number of items, to not put additional burden on consumers on most items.
Budget 2021: India Pegs FY22 Fiscal Deficit At 6.8%
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The government of India has set aside Rs 15,700 crore for medium and small enterprises in FY22 -- double of what was budgeted in the previous fiscal.
The Finance Minister today proposed to revise definition under Companies Act, 2013 for small companies by increasing their threshold for capitalization to not exceeding Rs 50 lakh to not exceeding Rs 2 crore and turnover not exceeding Rs 2 crore to not exceeding Rs 20 crore.
Budget 2021: Government Proposes Rs 20,000-Crore Bank Recapitalisation In 2021-22
Shares of Indraprastha Gas Ltd. and Mahanagar Gas Ltd. surged on Monday after Finance Minister Nirmala Sitharaman announced that the government will add another 100 cities to the City Gas Distribution network.
The minister also announced the setting up of an independent gas transport system operator.
Shares of IGL gained as much as 2.5% to Rs 528.75 while those of Mahanagar Gas gained as much as 1.8% to Rs 1,053.7.
Finance Minister Nirmala Sitharaman today proposed to amend Insurance Act, 1938 to increase FDI limit from 49% to 74% in insurance companies, and allow foreign ownership and control with safeguards.
Finance Minister Nirmala Sitharaman today proposed to consolidate provisions of SEBI Act, Depositories Act, Securities Contracts Regulation Act, Government Securities Act
The government is likely to stick to higher spending in FY22, in order to revive growth in the Indian economy.
People familiar with the matter have told Bloomberg that the government will target a budget deficit of 6.8% of GDP. The deficit will be 9.5% for the year ending March, against a planned 3.5%, the people said.
Bonds fell, with yields on the 10-year benchmark rising two basis points to 5.93% amid higher than expected budget deficit target. The rupee also pared gains of as much as 20 paise to trade little changed.
Fiscal deficit for the ongoing financial year is the highest since FY91 when it rose to 7.8%.
The government had pegged the fiscal deficit at 3.5% for FY21 in the last budget before the onset of the Covid-19 crisis. The pandemic inflicted twin pressures on the government’s balance sheet—a contraction in nominal GDP, which brought down tax revenues, and a need for greater spending to support the economy.
Ahead of the budget, JP Morgan’s Sajjid Chinoy and Toshi Jain had argued that it’s possible for the government to deliver a budget that expands spending while simultaneously reducing the headline budget gap.
JP Morgan’s analysis said with GDP expected to rebound sharply in the coming fiscal, some of the tax revenues that were lost in the last two years can be recovered. If that is combined with a successful asset sale programme by the government, then the expenditure can be increased while keeping the deficit under control.
Finance Minister Nirmala Sitharaman in the Union Budget announced a plan to introduce a bill for setting up a new Development Financial Institution.
The institution will have an initial capital of Rs 20,000 crore and it aims to have a lending portfolio of Rs 5 lakh crore over the next three years, the Finance Minister said.
The FY22 health and well-being spend has been pegged at 2.23 lakh crore, Finance Minister Nirmala Sitharaman said. Of this Rs 35,000 crore has been earmarked for the Covid-19 vaccine, she said.
The pneumococcal vaccine, limited to only 5 states at present, to be rolled out across the country Will avert more than 50,000 child deaths annually, informs Finance Minister .
Budget 2021: Finance Minister Announces New Health Scheme With Rs 64,180-Crore Outlay
Finance Minister Nirmala Sitharaman began the Budget FY22 presentation by recapping some of the welfare policies announced by the Narendra Modi government for farmers, healthcare workers, etc amid the pandemic.
“The government stretched its resources to provide for the most vulnerable,” she said, adding that the policies are equivalent to five different budgets.
"Faith is the bird that feels the light and sings when the dawn is still dark" the Finance Minister said, quoting Rabindranath Tagore, adding that this moment in history is the dawn of a new era, where India is well-poised to be the land of promise and hope". This comes ahead of the West Bengal State elections in 2021.
India's Manufacturing Purchasing Managing Index for the month of January stood at a three-month high, at 57.7 as compared to 56.4 in December.
This was the sixth consecutive month of expansion and the highest reading since October 2020.
Output rose to 62.7 in January as compared to 60.8 in December, the highest reading since October 2020.
A reading above 50 indicates expansion while that below 50 indicates contraction.
Delhi: Finance Minister Nirmala Sitharaman and MoS Finance & Corporate Affairs Anurag Thakur arrive at the Parliament. #Budget2021 pic.twitter.com/40RhaoNMUm
— ANI (@ANI) February 1, 2021
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“We were skeptical when the markets were making new highs. The index breaking levels of 14,222 was the first sign of weakness for us,” Sameet Chavan, chief technical and derivatives analyst at Angel Broking, told BloombergQuint over phone. “The Nifty has now closed below the five-week exponential moving average, which tells us that a move towards 13,200-13,000 cannot be ruled out.”
Indian equities nearly doubled from their multi-year lows in March 2020 as economic recovery following the strictest lockdown due to Covid-19 was faster than expected and foreign investors continued to plough money into the country’s stock markets.
Union Budget 2021-22 will be one of the most anticipated events in India’s recent history, writes Keki Mistry -- Vice Chairman and Chief Executive Officer of Housing Development Finance Corporation -- for BloombergQuint Opinion.
The dust is settling after the torrid health catastrophe that affected millions and threatened to leave a permanent emotional scar, and we are finally seeing the light at the end of the tunnel. India has had a faster than expected economic recovery and a low fatality rate from Covid-19. India’s case fatality rate of 1.44% is amongst the lowest in the world. The distribution of vaccines has also commenced. Commendable efforts by the government and healthcare professionals as well people and community participation to take safety precautions are enabling India to get itself back on track.
Budget 2021: What You Need To Know
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