Dalal Street Cheers Union Budget as Sensex Zooms 848 Points; Tata Steel & Sun Pharma Rally 7%

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Indian share markets witnessed positive trading activity throughout the day today and ended on a strong note.

Benchmark indices extended gains and ended on a firm note as investors gave a thumbs up to pro-growth Budget 2022.

Finance Minister Nirmala Sitharaman today unveiled a budget that aims to boost growth amid continued disruption from Covid-19 and rising inflation.

At the closing bell, the BSE Sensex stood higher by 848 points (up 1.5%).

Meanwhile, the NSE Nifty closed higher by 237 points (up 1.4%).

Tata Steel and Sun Pharma were among the top gainers today.

BPCL and IOC, on the other hand, were among the top losers today.

The SGX Nifty was trading at 17,595, up by 246 points, at the time of writing.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.1% and 0.9%, respectively.

Sectoral indices ended on a positive note with stocks in the metal sector, engineering sector and FMCG sector witnessing most of the buying interest.

Oil & gas and auto stocks, on the other hand, witnessed selling pressure.

Shares of Sun Pharma and IDFC hit their respective 52-week highs today.

Asian stock markets ended on a mixed note today.

The Hang Seng ended up by 1.1%, while the Shanghai Composite ended down by 1%. The Nikkei ended up by 0.3% in today's session.

US stock futures are trading on a negative note today with the Dow Futures trading down by 55 points.

The rupee is trading at 74.79 against the US$.

Gold prices for the latest contract on MCX are trading up by 0.7% at Rs 48,006 per 10 grams.

Key Takeaways from Nirmala Sitharaman's Budget 2022 Speech

Finance Minister Nirmala Sitharaman presented her fourth Budget today. This is Narendra Modi government's tenth Budget, and the second paperless budget in view of the ongoing Covid-19 pandemic situation.

Finance

• Public issue of Life Insurance Corporation (LIC) expected shortly
• Emergency credit line guarantee scheme for small and medium sized businesses to be extended to March 2023
• Energy transition and climate action will be a major government priority
• Long term capital gain (LTCG) surcharge to be capped at 15%
• To amend bankruptcy code to speed up resolution process
• Aims to lower winding up of companies to 6 months from 2 years currently

Digital Currency

• To launch digital rupee using blockchain technology starting 2022/23
• To launch scheme for taxation of virtual digital assets
• Losses from sale of virtual digital assets cannot be offset against other income
• Income from virtual digital assets to be taxed at 30%

PM Gati Shakti plan

• 400 new generation Vande Bharat trains with better efficiency to be brought in and 100 PM Gati Shakti Cargo terminals to be developed during next 3 years
• Railways will develop new products and efficient logistics services for small farmers and small and medium enterprises, besides taking the lead in integration of postal and railways networks to provide seamless solutions for movement of parcels
• Multimodal connectivity between mass urban transport and railway stations will be facilitated on priority

Agriculture

• Domestic scheme introduced to reduce dependence on oilseed imports
• Fund with blended capital raised under co-investment model to finance agriculture startups

Capex

• The central government continued its focus on capital expenditure in its budget for the fiscal 2023 to aid economic recovery.
• The government capital expenditure for the financial year 2023 is pegged at Rs 7.5 tn, forming about 2.9% of India's GDP.
• The capex announced is 35.4% higher than the budget estimate of Rs 5.54 tn in the same period last year. 'Public investment needs to crowd in private investments to help private investments rise to potential and take the lead', Sitharaman said.
• The allocation of Rs 480 bn announced under the PM Housing scheme. Going ahead, this will help real estate, paint and adhesives companies.

Taxation

• Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
• Customs duty on stainless steel, flat products, high steel bars to be revoked
• Unblended fuel to get additional duty of 2 rupees per liter from October 2022
• Import duty on certain chemicals are being reduced

That apart, Finance minister said that India's GDP growth will be highest amongst all economy. According to her speech, India will report an economic growth of 9.2% for the fiscal 2022.

Speaking of budget, in his latest video, Rahul Shah discussed whether there is a strong correlation between union budget and the near term stock market returns.

Meanwhile, Research Analyst at Equitymaster Aditya Vora believes the budget was aimed at a strong push for the capital goods sector thus benefitting old economy like cement and steel.

As per him, private capex could be the next trigger for the economy.

In news from the auto sector, Maruti Suzuki was among the top buzzing stocks today.

Maruti Suzuki India sold a total of 1.5 lakh units in January 2022. Total sales in the month include domestic sales of 1.3 lakh units, sales to other original equipment manufacturer (OEM) of 3,981 units and exports of 17,937 units.

In a statement, Maruti Suzuki India said,

• The shortage of electronic components had a minor impact on the production of vehicles which are primarily sold in domestic market. The company took all possible measures to minimise the impact.

The Gurugram-based largest car maker sold 18,634 units in the mini segment in January 2022 as compared to 25,153 units during the same period last year. The mini segment of Maruti Suzuki consists of Alto and S-Presso.

The compact segment too went down to 71,472 units in January 2022 as compared to 76,935 units in the same phase in 2021. The compact segment of MSI has Baleno, Celerio, Dzire, Ignis, Swift, Tour S and WagonR.

On the contrary, the mid-sized Ciaz saw a demand in sales in Jan 2022. The company sold 1,666 units in January 2022 compared to 1,347 units in the same period last year.

In the UV segment, cars such as Ertiga, Gypsy, S-Cross, Vitara Brezza, XL6 sales went up to 26,624 units in January 2022 against the 23,887 units last year. The sales of Eeco dip a bit to 10,528 units this year against the 11,680 units in January 2021.

Exports have risen for MSI in January 2022 with 17,937 units against the 12,445 units last year in January.

Maruti Suzuki share price ended the day down by 0.4% on the BSE.

Moving on to news from the telecom sector...

Telecom Stocks in Demand After FM says 5G to be Rolled Out in 2022

Telecom stocks hogged the limelight after Finance Minister Nirmala Sitharaman in her Budget speech today said that a required spectrum auction will be conducted in 2022 for the rollout of 5G mobile services by private telecom providers.

A scheme for design-led manufacturing to be launched for the 5G ecosystem as part of the PLI scheme would enable affordable broadband and mobile communication in rural and remote areas, the minister said.

The auction of the 5G spectrum in the new fiscal put the telecom services providers, related players and the optical fibre stocks at the sweet spot.

To enable affordable broadband and mobile service and proliferation in rural areas, 5% of annual collection under USOs fund will be allocated, to provide and promote R&D and commercialisation of tech and solutions.

Shares of Vodafone Idea ended on a flat note, whereas Bharti Airtel ended the day down by 0.9%.

Telecom players including HFCL surged 5%, whereas Tejas Networks zoomed 4% following Sitharaman's announcements. Telecom Equipment player ITI also ended up by 0.8%.

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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