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Impact of Budget 2024 - Impact of budget on stock market

Published on 23 Jul, 2024

Impact of Budget 2024 on the stock market and key budget highlights. key features of Budget 2024-25 and its implications for India's economy. The Union Budget 2024 and its significant changes.

Overview of Budget

The presentation of the Union Budget 2024 by Finance Minister Nirmala Sitharaman had a significant impact on the Indian stock market. The budget's focus on fiscal consolidation, infrastructure spending, and social upliftment has led to a mixed reaction from investors.

Positive Market Movements after Union Budget 2024

Ahead of the budget announcement, major indices like the Sensex and Nifty saw gains. The Sensex rose by 612.21 points (0.86%) to close at 71,752.11, while the Nifty 50 increased by 203.60 points (0.95%) to settle at 21,725.70. This positive movement was driven by expectations of favorable announcements, especially concerning infrastructure and social sector spending.

Key Budget Highlights

1. Infrastructure and Capital Expenditure

The government maintained a strong focus on infrastructure, allocating Rs 11.11 lakh crore for various projects, including roads, airports, and industrial parks. This is expected to benefit companies like Larsen & Toubro, Bharat Forge, and KNR Constructions.

Allocation: Rs 11.11 lakh crore for infrastructure projects.
Focus Areas: Development of roads, airports, and industrial parks.
Headquarters: Gurugram, Haryana, India
Impact: Beneficial for companies like Larsen & Toubro, Bharat Forge, and KNR Constructions.

2. Taxation Changes

The budget introduced changes in capital gains tax, with short-term capital gains tax increased from 15% to 20% and long-term gains from 10% to 12.5%. Additionally, there were increases in the Securities Transaction Tax (STT) on futures and options.

▽ Capital Gains Tax

Short-term: Increased from 15% to 20%
Long-term: Increased from 10% to 12.5%

▽ Securities Transaction Tax (STT)

Futures: Increased from 0.0125% to 0.02%
Options: Increased from 0.0625% to 0.1% on the premium

▽ Share Buyback Tax

New tax introduced, impacting market sentiment

3. Renewable Energy and Utilities

Incentives: Fiscal benefits for solar, wind, and other renewable energy projects.
Impact: Positive for companies such as NTPC and Tata Power.

4. Consumer Spending and FMCG Sector

Tax Cuts: Potential tax reductions to increase disposable income.
Impact: Likely boost for FMCG companies like Hindustan Unilever and Nestle India.

5. Social Sector Initiatives

Healthcare and Education: Continued emphasis on improving healthcare and education facilities.
Impact: Long-term benefits for overall societal development.

Market Reaction after budget

Despite initial optimism, the broader market saw some declines, with indices like Nifty Small Cap slipping nearly 0.90%. This mixed reaction reflects concerns over the increased capital gains tax and the removal of indexation benefits on certain assets. Additionally, the new tax on share buybacks could impact market sentiment negatively

Budget's

Budget's focus on long-term growth and infrastructure is seen positively, short-term market reactions have been cautious due to specific tax changes and global economic factors. Investors are advised to keep a close watch on how these policies unfold and consult financial advisors for tailored investment strategies.

Disclaimer

The information provided on this blog is for general information purposes only and is not a substitute for professional advice. We make no guarantees about the completeness, reliability or accuracy of this information.