The government's emphasis on consumption, infra and capex push boosted sentiment but sell-off in insurance stocks due to the new tax regime blew off the gains
The BSE Sensex eventually ended at 59,708.08, up 158.18 points or 0.27 percent.
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Even as the equity markets seemed enthusiastic about the government’s Budget measures to boost growth by pushing investments, the euphoria was shortlived. A 1,223-point rally on the Sensex during the Budget speech by Finance Minister Nirmala Sitharaman turned into a drastic fall as investors sieved through details of the announcements. An overtly optimistic Budget math triggered jitteriness among investors.
What added to the anxiety and nervousness is the massive selling rout in Adani group stocks, some of which are index heavyweights.
The BSE Sensex eventually ended at 59,708.08, up 158.18 points or 0.27 percent. The 30-share index Nifty closed at 17,616.30, down 46 points or 0.3 percent. The India volatility index or India VIX was down 0.56 percent indicating that investors’ perception of markets volatility is low.
Nomura economists feel the Budget numbers were overly optimistic. “On the margin, we think yes. We expect growth to slow materially in FY24, owing to a mix of developed markets recessions and the lagged impact of tighter monetary policy, with real GDP growth at 5.1 percent year-on-year in FY24 and nominal GDP growth at around 8.5-9 percent. The resulting lower nominal GDP growth means tax revenues are likely to disappoint. In addition, we foresee political pressure for countercyclical spending, especially given that the current plans suggest revenue expenditure growth of only 1.2 percent in FY24,” say Sonal Varma and Aurodeep Nandi, economists, Nomura. They feel the government can still meet its 5.9 percent deficit target, but will have to cut back on its projected capex target.