Impact of the Budget 2024 on Share Markets

03 Feb 2022|

1 min read |

by ICICI Securities Team

Introduction

The Union Budget 2022 got quite a cheer from the share market as major indices ended on a positive note. The NIFTY 50 and the Sensex benchmark indices gained during the Budget speech and finished green.

The NIFTY50 index climbed 237 points, rising 1.37% to end at 17,576.85. Meanwhile, the S&P BSE Sensex rose 848.40 points, increasing 1.46% to end at 58,862.57.

Regarding the different sectors, the Budget 2022 announcements led to the banking sector, capital goods, FMCG, pharmaceuticals, IT, realty and metal indices to rise 1-5%. The BSE midcap and smallcap indices rose by 1% each. On the other hand, the automotive sector and Oil and Gas closed in red.

Additional Read: Sector-Wise Key Takeaways From Budget 2022

Sectoral Impact

Defence Stocks – The Finance Minister’s announcement of allocating 68% of the defence capital for local sectors resulted in defence stocks ending up 5% higher.
Sugar Stocks – Unblended fuel will attract an additional charge of Rs. 2 per litre. The market viewed this as a positive step for ethanol fuel blending, which resulted in sugar stocks ending in green.
Metal Stocks – The customs duty exemption on steel scrap being extended by a year led metal stocks to rally.

Beyond the Budget

Several sectors in the country will benefit from the Union Budget announcements. For instance, the infrastructure industry will help hugely going forward, emphasising infrastructure spending through the PM Gati Shakti Master Plan.

The Rs. 19,500 crore of additional allocation for the manufacturing of solar power under the PLI and clean energy schemes will give a boost to solar manufacturers. Meanwhile, initiatives for the Electronic Vehicle sector such as the battery swapping announcement and green bonds will be beneficial for EV companies and new-age fintech companies.

However, the lack of focus on the rural sector is likely to negatively impact sectors such as the automotive industry, FMCG, and white goods industries. The cryptocurrency market is also likely to see a dip in the long run because of the hefty tax of 30% imposed.

Additional Read: Missed the Union Budget 2022 Speech? Here’s what you need to know

Conclusion

Overall, the stock markets viewed the growth-driven budget as a positive. Several industries such as electric vehicles, infrastructure and banking gained from the budget.

Additional Read: Union Budget 2022: Things that will Get Cheaper and More Expensive for You

Sources

Budget Documents of 2022
The NIFTY50 climbed 237 points, rising 1.37% to end at 17,576.85 (Source – Indian Express as of February 1, 2022)
S&P BSE Sensex rose 848.40 points, an increase of 1.46% to end at 58,862.57 (Source – Indian Express as of February 1, 2022)
68% to defence capital (Source – Business Standard as of February 1, 2022)
Rs. 2 per litre (Source – Business Standard as of February 1, 2022)
Rs. 19,500 crore (Source – CNBCTV as of February 1, 2022)
30% tax on cryptocurrencies (Source – Indian Express as of Feb 1, 2022)

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