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Closing Bell: Sensex gains 158 pts, Nifty falls on Budget day; metal, PSU Banks take a hit – Moneycontrol

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Cyril Charly, Research analyst at Geojit Financial Services:

Life insurance stocks witnessed significant selling on demand concerns as the budget proposals made life insurance schemes less appealing as a tax-saving instrument. The Union Budget has provided a higher impetus for individuals to shift to the new tax regime, which does not favour tax exemptions from investments in insurance schemes. 

Adding concerns to the growth outlook, it was also proposed to tax the income earned from life insurance products (other than ULIPS) issued after April 1, 2023, where the total annual premium exceeds Rs. 5 lakh. 

This has taken away the tax-free advantage of high-value traditional insurance policies, making them less attractive for investments. These proposals have come as a big blow to the sector, which had hoped for positive measures from the government to improve its penetration. This has caused investors to reconsider the sector’s growth prospects, forcing them to stay side-lined.

Britannia Q3 results:

Britannia Industries reported a consolidated net profit of Rs 932.39 crore for the December quarter of the financial year 2022-23, up 151.19 percent from Rs 371.18 crore in the same quarter of the previous year. This included one time gain of Rs 375.60 crore. Excluding the one time gain, the profit jumped 50 per cent year on year (YoY).

The revenue from operation came in at Rs 4,196.80 crore, up 17.39 percent from Rs 3,574.98 crore in the corresponding quarter last year, the biscuit maker said in an exchange filing.

Ashok Leyland January Auto Sales | Company’s total sales were up 23 percent at 17,200 units against 13,939 units, YoY

Ashok Leyland ended at Rs 147.70, down Rs 2.20, or 1.47 percent on the BSE.

Rohan Patil, Technical Analyst, SAMCO Securities:

The daily candle of the benchmark index Nifty purely indicates a super volatile day, where prices swung over 600 points and formed a long wick on both ends. From the past four trading sessions prices are taking support near 200 DMA, which is placed at 17,550 levels on the daily scale.

The monthly chart of Nifty-50 has turned bearish as we witnessed the follow-up bearish candlestick after bearish engulfing in December 2022. As the bearish pattern was formed at all-time high levels, prices need to cross the high of 18,888 on the closing basis to neglect the bearish candle stick set up.

The moving average study on the weekly time frame indicates the Nifty is trading at make-or-break levels near its 50 EMA which is placed at 17,400 levels. A closing below 17,400 – 17,300 may accelerate the bearish momentum towards 17,000 – 16,800 which were the prior support zones for the benchmark index. On the other hand, resistance is capped below the 18,100 level and if prices surpass that level, then the 18,300 levels will be the next resistance.

For Nifty, maximum OI build up is seen at 17,000 Put and 18,000 Call Option for the 2nd February expiry and for the next week expiry, maximum OI build up is seen at 17,500 Put and 18,000  Call & followed by 18,200 Call Option. The PCR ratio for the near week expiry stands at 0.54 and for the next week expiry at 0.68. The overall writing data suggests negative bias as Call writing is higher than Put writing. The immediate or temporary bounce back cannot be ruled out as PCR ratio drops near to 0.50 levels.

Madhavi Arora, Lead Economist – Emkay Global Financial Services

The budget has ensured, the fiscal impulse is maximized to improve potential growth, while signalling adherence to medium-term fiscal sustainability. This requires continued financial sector reforms, better resource allocation. Expenditure focus has been on rural, welfare, infrastructure, PLIs, and energy transition. Capex spend has picked up significantly to 3.3% of GDP and is almost double of Pre-Pandemic prints. 

This especially implies larger fiscal multiplier on employment and growth and will support crowding in of still-lacking private capex.

The tax benefits have been tweaked to encourage individuals to move towards new tax regime, and to provide relief to middle class, while maximum marginal rate has also been reduced to 39% from 42.7% to give relief to the highest income strata. 

While the government is foregoing effective revenue of Rs 350 billion, this could have a consumption multiplier effect albeit at the margin, in the economy that’s seeing fading consumption growth.

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Raghvendra Nath, MD, Ladderup Wealth Management

Like the last couple of years, the finance minister has rightly changed the budget exercise into a Vision exercise, where it lays down the Vision of the government for the next few years and make sure that all the facets of the economy are taken care of. Today the finance minister announced initiatives like green energy, inclusive development, reaching last mile, infrastructure investment, unleashing potential, youth power and financial sector which are required. While most of us await tax reforms, there is only so much that can be done in increasing or decreasing taxes. 

Ultimately, how the govt spends the revenues and borrowings has a far greater impact on the Economy and the people.

 From an Economic standpoint, keeping the fiscal deficit at 5.9% for FY 24 and more importantly, promising to bring down the fiscal deficit to 4.5% by FY25-26 is a big statement which has been welcomed by the market. Another positive is the unchanged government borrowing programme at the previous year’s level. There was an apprehension that since this is the last budget before the general elections next year, the government may spend more. The good thing is that the government has shown fiscal prudence in bringing down the fiscal deficit and keep the borrowing unchanged.

Suresh Agarwal, MD & CEO, Kotak Mahindra General Insurance Company

Taking it a notch above the expectations of the middle class, the budget has special thrust on women and youth which makes it truly citizen-centric. To remain the fastest growing major economy in the world, it demonstrates the government’s intent to improve a taxpayer’s purchasing power through income tax rebates, enhanced grievance redressal mechanism for direct tax payers and capital deductions from capital gains on investments, while being overall fiscally prudent to address inflation. 

Further, rolling out a host of initiatives to support domestic industries, the budget sets positive sentiments in placing India in a resilient position amidst a global slowdown.

Pankaj Pathak, Fund Manager- Fixed Income, Quantum AMC

The government has done a fine balancing act of boosting capital expenditure while consolidating the fiscal deficit. The quality of government expenditure has improved consistently in the last three years with capex to total expenditure rising from 12% in FY21 to 22% in FY24. This should enhance future growth potential of the economy and should lead to higher revenues for the government over medium to long term. 

From bond market’s perspective, reduction of fiscal deficit to 5.9% of GDP and lower than expected market borrowing of Rs. 15.4 trillion were somewhat positive. Government reiterated its commitment to further consolidate its fiscal deficit to below 4.5% of GDP by FY 2025-26. This should help investor sentiment in the bond market. We expect the government bond yields to remain around current levels or decline marginally over the coming months. 

Anindya Banerjee, VP – Currency Derivatives & Interest Rate Derivatives at Kotak Securities

USDINR spot closed flat, 1 paise higher at 81.93 on a day of sharp two way price movement. It was a reformist budget which also focussed on fiscal consolidation and simplification of tax laws. 

However, FPI continued to sell Indian stocks are portfolio reallocation continue from India to China. Now all eyes on the Fed meeting. Market expects a 25 bps hike but focus will be on their guidance. 

We expect volatility to continue but USDINR remains well supported near 81.50. A broad range of 81.50 and 82.50 can be seen over the near term.

Kunal Shah, Senior Technical Analyst at LKP Securities

The Bank Nifty witnessed a highly volatile session as the index hovered within a 2500-point range. On the daily chart, the index has sustained below the 50 EMA. The daily momentum indicator RSI is in bullish crossover.

The sentiment is likely to remain weak as long as it remains below 41150. On the lower end, support is placed at 39500/38800. On the higher end, resistance is visible at 41150.