Indian bond yields reversed course after the government announced gross borrowing at 15.43 trillion rupees for the next financial year and net borrowing at 11.80 trillion rupees.
The benchmark bond yield dropped much as 11 basis points from the day’s high levels, while the Indian rupee rose slightly against the dollar.
Finance Minister Nirmala Sitharaman said the government will spend 10 trillion rupees ($122.3 billion) on longer-term capital expenditure in 2023/24, extending a strategy adopted to revive growth in the aftermath of the COVID crisis.
She also raised the rebate limit for personal income tax to 700,000 rupees from 500,000 rupees, sending shares higher.
India’s federal government cut down the fiscal deficit target to 5.9% of GDP in the next financial year, compared to 6.4% for the current fiscal year.
This is the last full-year budget before the national elections in 2024 and key state elections later this year.
Banks and financials were the top gainers among the 13 major sectors, rising 1.5% and 1.6%, respectively.
India has pegged its economic growth at 6-6.8% in the 2023/24 fiscal year, the slowest in three years, at its pre-budget economic survey released on Tuesday.
Shares of seafood company Avanti Feeds Ltd and Coastal Corporation rose 5.8% and 4.8% respectively after Sitharaman announced plans to raise spending on the fisheries sector.
Meanwhile, most Adani Group stocks dropped, extending their losses since short-seller Hindenburg Research’s report and despite the group completing a $2.5 billion share sale a day earlier.
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The Finance Minister has given a major boost to the consumption economy by increasing the income tax rebate for individuals from 5 lakhs to 7 lakhs annually. This should benefit the majority of Indians who have been struggling with inflation, freeing up more funds for spending and boosting consumption. The new tax regime, featuring a default option, standard deduction of Rs. 50,000, and simplified slabs and rates, should encourage individuals to adopt the new regime and simplify their personal income tax.
– Santosh Navlani, COO & Personal Finance Expert, ET Money
India budget 2023 has offered a multi-dimensional view. The 3 Cs which stand out are – Capex increase – consumption boost – capital gains tax status quo. Mindful of the fact that there is hardly any space for fiscal expansion. FY 24 FD is pegged at 5.9% and expected to see progressive reduction by FY 2026. Clearly a bull’s-eye budget satisfying most strata of the society and of course a thumbs up from the market as well.
– Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors
An extremely well-balanced budget focussed on growth driven by capital expenditure while giving an adequate push to rural welfare and agriculture. Government borrowing is well-calibrated, and it is a significant positive. The fiscal deficit target of 5.9% indicates a considerable degree of prudence. On top of this, relief to the middle class on the income tax front is the cherry on the cake. At this point, it is difficult to find any shortcomings. The budget has delivered on all the expectations very well. In the short term, we expect the markets to move higher on the back of pro-growth measures announced in the budget and less fear of the government crowding out private investments due to fiscal prudence shown by the government.
– B Gopkumar, MD & CEO, Axis Securities
BUDGET IMPACT | Defence stocks tumble up to 5%
Price as on 01 Feb, 2023 01:53 PM, Click on company names for their live prices.
The market had a mixed expectations on the budget presuming to be populist and low elbowroom for the government ahead of the slowing economy, high inflation and interest rates. However, the government has taken it to a new zone with a well-tuned perfection between growth and stability. The rise in capital expenditure by 33% to Rs 10 lac cr is the shot in the arm heading a multiplier effect on the economy. While high amount of schemes and tax benefit to rural economy and taxpayers will enhance consumption growth in India. Much beyond expectations, a win-win for households and corporates. It is a 10 on 10 budget.
– Vinod Nair, Head of Research at Geojit Financial Services
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Concerns of LTCG tweak was also not touched also gave the sugar high for the equity markets.Going ahead, in a world which is slowing materially, India’s Capex frontloading likely to keep domestic centric Indian economy.
Clear take away from this budget is focus on India (domestic centric focus). Consumption (on account of higher disposable income) and Capex sectors (capex up by 33%) both will see strong tail wind along with focus on railways, ports & airports and tourism. Fiscal prudence continues to prove strong tailwind for banking sector that is only moving towards its long-term valuation bands.
Given that financial services is one of the key pillars of growth during Amrit Kaal, focusing on financial stability with technology-driven innovation will characterise the financial services ecosystem in the future. 10 lakh crore capital investment will create GDP growth and generate wealth creation opportunities for the citizens of India across the income spectrum, thereby increasing the chances for asset management funds in India.
– Vivek Ramji Iyer, Partner and National Leader Financial Services, Grant Thornton Bharat
As expressed in our Budget Expectations, the FM scored in both the Economic expansion line as well as relieving common man with higher Personal Disposable Income in Hand. This budget enables domestic consumption growth while boosting business & investment sentiment for corporates.
– Anmol Das, Head of Research, Teji Mandi
BUDGET IMPACT ON MARKETS | Shares of real estate companies were mixed after Finance Minister Nirmala Sitharaman announced increasing PM Awas Yojana (PMAY) outlay by 66 per cent to Rs 79,000 crore for the next fiscal year.
Price as on 01 Feb, 2023 01:26 PM, Click on company names for their live prices.
BUDGET IMPACT: INSURANCE STOCKS UNDER PRESSURE
Price as on 01 Feb, 2023 01:23 PM, Click on company names for their live prices.
Reducing customs duty on certain categories was a good sign, signals opening up of sorts. Increasing the exception slab to 7 lakhs should help shore up consumer spends in turn helping many industries. Didn’t change anything around capital gains is a positive, markets were factoring in a small percentage chance of this detrimentallly affecting capital mkts. Overall Capex no is a positive and is better than expected. No reduction in stt is a negative,a reduction will go a long way in helping retail investors and traders who provide much needed liquidity be profitable. The issue still remains that 7 cr people file tax and 1 cr people pay tax, india has 140 cr people, this can’t be right, we need increased plugs to curtail tax evasion.
– Nikhil Kamath, co-founder Zerodha and True Beacon
Net tax on cigarette would increase by Rs 0.07/stick to Rs 0.12/stick, which would require 1-3% price hike for cigarette in difference category. The hike in taxes is not very high & would be easily passed on by small increase (1-3%) in prices: ICICI Direct
Price as on 01 Feb, 2023 01:09 PM, Click on company names for their live prices.
The revamping of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) will facilitate additional collateral free credit guarantee of Rs 2 lakh crore rupees. Also, the 64 percent increase in allocation for PM Awaas Yojana to Rs 79,000 crore is a positive step for making commercial vehicles and tractors used for moving construction materials more affordable.- Vikas Singh, CEO and CO-founder, Sugmya Finance private Limited
– Vikas Singh, CEO and CO-founder, Sugmya Finance private Limited
The government’s relief on personal income tax by providing rebate upto Rs.7 lakh and making changes in the slab rate under the new income-tax regime comes as a major boost to the Indian markets. The FM did not tinker with the capital gains which has cheered the markets. As the disposable income increases, FMCG sector gets a shot in the arm which are already battling inflation. BFSI sector…