Sensex Gains 486 Points, Nifty 155 As Markets Close on high note after Budget Announcements
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- By Taxmann
- Last Updated on 23 October, 2020
Indian markets closed on a high note on Wednesday following the presentation of the Union Budget, with the Bombay Stock Exchange rising 485.68 points to close at 28,141.64 and the National Stock Exchange Nifty gaining 155.10 points to end the day at 8,716.40. Investor sentiment remained positive on the back of measures such as a tax cut for small businesses and the allocation of Rs 3.96 lakh crore for infrastructure development.
Banking stocks were among the day’s best performers, with institutions such as Bank of India, State Bank of India and Union Bank of India rising 2.85%-4.58%. This came after Union Finance Minister Arun Jaitley announced that the Centre would provide Rs 10,000 crore to public-sector banks to recapitalise them. The Nifty’s Public Sector Unit Bank index ended the day 3.96% higher.
The BSE’s Realty index also rose by 4.83% because of the government’s announcement to provide one crore houses for the poor by 2019. The Centre’s decision to to create an integrated public sector oil major boosted oil and gas companies companies such as Hindustan Petroleum Corporation Limited, Indian Oil Corporation and Oil and Natural Gas Corporation. The BSE Midcap and Smallcap indices also rose by 1.77% and 1.68%.
However, pharmaceutical and information technology stocks ended in the red, with companies such as Aurobindo Pharma Limited, Dr. Reddy’s Laboratories Limited, Wipro Limited, and Tata Consultancy Services Limited falling between 0.11%-2.91%. IT stocks have been sinking since Tuesday afternoon after reports said a Bill had been introduced in the United States House of Representatives, proposing major changes to the H-1B visa. The High-Skilled Integrity and Fairness Act of 2017 calls for more than doubling the minimum salary of H-1B visa holders.
Analysts said that investors had also welcomed the government’s decision to keep the fiscal deficit target at 3.2% of the country’s Gross Domestic Product for 2017-2018 and 3% for 2018-2019. Taxmann Director Rakesh Bharagava said the reduction in corporate tax rates would “give a boost to the startup ecosystem”. “It will encourage unorganised partnership firms to incorporate a company,” he said, according to NDTV. Stock markets had opened on a cautious note and made only minor gains in morning trade as investors awaited the Budget.
Meanwhile, the Indian rupee hit a seven-week high against the US dollar on Wednesday morning. It opened at 67.61 against the greenback. This value was last seen on December 14, 2016. A buying spree from foreign institutional investors in the local equity markets is believed to have caused this gain, reported Mint.
Analysts were hopeful that a populist Budget would boost markets. Expectations were high because it is the first Budget since the demonetisation drive. “The fine print behind the fiscal math will be watched closely. Expectations are running high for an expansive budget. The government had, ahead of the Budget, already announced a host of measures,” DBS Bank Chief Economist Radhika Rao told Mint.
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