“The growth and development-oriented budget is likely to have a positive impact on the Insurance sector and boost the demand for surety bonds (for infrastructure), crop insurance and agricultural products. It will also create opportunities for specialised insurance products for emerging sectors like renewable energy,” said Amit Roy, Partner and Leader of Insurance and Allied Business at PwC India.

“Union Budget day turned into a roller coaster for investors, with the Nifty Index fluctuating dramatically before ending the session flat. The initial mood was subdued, but the announcement of increased STT on F&O and higher STCG and LTCG tax rates sparked a sharp reaction midway through the day. However, buoyant performance from select heavyweights helped recover most of the losses in the latter half,” said Ajit Mishra, Senior Vice President of Research at Religare Broking.

The NSE Nifty 50 closed 0.13% lower at 24,476.55, while the BSE Sensex closed 0.08% lower at 80,440.41.

“The reduction of customs duty on gold & silver to 6% and platinum to 6.4% is a welcome move by the Finance Minister. This was one of the long-standing demands of the industry and coming up of this announcement especially at a time when the industry is already grappling with various challenges will certainly help the industry to march on the path to progress. This will play a major role in bringing down the cases of smuggling and provide cost benefits to the consumers in the country, which will provide a major fillip to the demand in the domestic market. This will also provide a big boost to FTAs, thereby creating a space for expanding the exports in the less explored overseas markets. Additionally, introduction of Credit Guarantee Scheme in MSME Sector for collateral-free loans will help in empowering the MSME sector. Setting up of E-Commerce and MSME hubs under Public Private Partnership (PPP) will play a key role in facilitating services pertaining to trade and exports. FMs proposal to withdraw the 2% equalisation levy will assist in providing relief to digital companies, thereby giving a major boost to online buying. Lastly, acceptance of Safe Harbour Rule for the sale of rough diamonds in Special Notified Zones (SNZs) is another welcome step which will help in brining transparency in trade activities in the SNZs,” said Colin Shah, MD of Kama Jewelry.

The Finance Minister’s 7th straight Budget has as its objective Viksit Bharat. According to Sundararaman Ramamurthy, BSE MD & CEO said that he finds the budget as a forward looking, equitable, middle class oriented all-inclusive budget, covering poor, women, youth and farmers. “With clear emphasis on 9 priorities, it lays down the road map for infrastructure development, startups, SME’s, job creation, and skill development, innovation, etc. These are likely to create new opportunities, uplift demand, and unlock multipliers for the economy including long term capital formation with fiscal prudence,” said Ramamurthy.

The benchmark equity indices recovers from intra-day lows. The NSE Nifty 50 is trading down by 31.05 points or 0.13% at 24,478.20, while the BSE Sensex is down by 81.16 points or 0.10% to 80,420.92.

Shares of Tata Group’s Titan Company and Senco Gold surged as much as 6% on Tuesday after Finance Minister Nirmala Sitharaman announced a reduction in customs duties on gold, silver, and platinum.

Sitharaman in her Budget speech revealed that the customs duty on gold and silver will be reduced to 6% from the previous 15%. Similarly, the customs duty on platinum will be lowered to 6.4% from 15.4%.

Shares of ITC experienced a notable gain of over 4% on Tuesday, making significant contributions to the Nifty index’s upward movement. The stock is adding close to 40 points, helping to mitigate broader index losses.

The surge in ITC’s shares comes in response to Finance Minister Nirmala Sitharaman’s budget speech, during which no changes were announced regarding tobacco taxation.

“The budget tries to balance growth at the cost of unlisted Debt, bonds ( as per applicable income tax rate) and capital market tax rationalization on STCG, LTCG and Security transaction tax on F&O. It also tries for adoption of the simplified tax regime for Personal tax payers by increasing the Standard deduction.

The implementation of TDS under section 194T on payment of salary, remuneration, bonus, interest or commission by partnership firm to partners, is aimed at bringing parity with private limited companies, but will affect the flexibility of operations at the lower scale of partnership firms,” said Anuragg Jhanwar, Partner and Cofounder at Upwisery Private Wealth.

The increased tax rates are expected to impact investor returns, leading to a reevaluation of investment strategies and potentially lower participation in the equity markets. The new tax measures announced by the Finance Minister have created a bearish sentiment in the stock markets, with significant pressure on both indices.

Key Changes and Market Impact:

• Long-term Capital Gains Tax (LTCG): Raised from 10% to 12.5% on all financial assets, including equity. This increase adds a higher tax burden on long-term investors, potentially reducing the attractiveness of long-term equity investments.

• Short-term Capital Gains Tax (STCG): Increased from 15% to 20%. The higher STCG rate could deter short-term trading and reduce market liquidity, as investors may seek to avoid the increased tax impact on their profits from short-term trades.

• Security Transaction Tax (STT): Raised from 0.01% to 0.02% on Futures & Options (F&O) transactions. The increase in STT on derivatives trading may lead to reduced activity in the F&O segment, affecting overall market volumes and investor sentiment.

According to Shripal Shah, MD & CEO of Kotak Securities, this Union Budget sets a clear vision for India’s economic future, prioritizing both growth and fiscal responsibility. The increase in the tax rate on long-term capital gains and short-term capital gains on equity, along with the increase in STT on futures and options, are aimed at moderating currently heightened activity levels and fostering a more sustainable pace of growth in the stock market. “We anticipate a small period of adjustment as the market adapts to these new tax measures, but this will ultimately contribute to a sustainable investment landscape with balanced and orderly growth of the capital market,” it said. Overall, this budget instils confidence in India’s growth trajectory and lays a strong foundation for the future. “We remain optimistic about the long-term prospects for the Indian economy and capital markets.”

“While we await details from the fine print, prima facie, these announcements appear to be positive for construction companies. Housing finance companies, particularly those focused on low-ticket housing, would also be beneficiaries of the PM Awas Yojana. Having said that, the disbursements under such schemes in the past have made up a very small proportion of the loan books of these companies. On balance, we believe that these announcements are marginally positive for the sectors,” said Tejas Gutka, Fund Manager at Tata Asset Management.

Financial Services stocks bearing the brunt of the bump in the STT. The government raised the short-term capital gains tax to 20% from 15% ineffective from July 23. The sectoral index Nifty Financial Services was being dragged by banking majors like HDGC Bank, ICICI Bank, Axis Bank, and many others.

“Though long-term capital gains have been unified across all asset classes, there is a huge impact on unlisted securities and real estate on account of removal of indexation benefit. Overall tax costs will substantially rise as this benefit is now denied,” Diana Mathias, Partner at Cignas said.

Nifty Realty snaps morning gains as the government reduced long-term tax on realty to 12.5% from 20% earlier.

Courtesy: NSE

The volatility index India VIX cooled down by -11.44% to 15.44.

Investors nudge towards defensive stocks. The sectoral index Nifty FMCG was up 2.17% as markets saw a sharp sell-off after Nirmala Sitharaman, Finance Minister, raised short-term capital gains tax to 20% from 15% and reduced long-term capital gains tax to 12.5% from 10%.

Courtesy: NSE

Shares of Tata Group’s Titan Company Ltd. surged as much as 3% after Finance Minister Nirmala Sitharaman announced a reduction in customs duties on gold, silver, and platinum. In her Budget speech on Tuesday, the Finance Minister revealed that the customs duty on gold and silver will be reduced to 6% from the previous 15%.

Markets falls to day lows. The NSE Nifty 50 plunged 353.10 points or 1.44% to settle at 24,156.15, while the BSE Sensex dropped 1058.98 points or 1.32% to 79,443.10. whereas the Nifty Midcap index fell over 3% or 1891.32 at 54,733.50

The Finance Minister announced that long-term capital gains on all financial and non-financial assets will be taxed at a rate of 12.5%. Additionally, the exemption limit for capital gains will be set at Rs 1.25 lakh per year.

Short-term gains to attract 20% tax on some assets, said Nirmala Sitharaman while giving the budget speech. FM proposes simplifying short-term gains tax. While the long-term gains tax is kept at 12.5%

Finance Minister announced plans to reduce customs duties on gold and silver, with the duty on gold set to decrease to 6%. Companies in focus include Titan and MMTC, which are expected to benefit from this change.

Commenting on the FMCG sector outlook Atul Parakh, CEO of Bigul said that the 2024 budget’s social sector measures could potentially boost rural demand, benefiting FMCG companies. Increased allocations for schemes like MGNREGA and agricultural support may improve disposable incomes. However, the consumption story remains mixed, with urban demand outpacing rural.

Parakh also added that Sectoral rotation is possible as investors reassess valuations post-budget. FMCG might see renewed interest, but it’s crucial to be selective. Focus on companies with strong rural penetration and value positioning. Cautious optimism is warranted. Monitor Q1 FY25 results for concrete signs of demand recovery before making significant portfolio shifts.

Shares of Hero MotoCorp Ltd. gained as much as 3% on Tuesday, July 23, after Finance Minister Nirmala Sitharaman announced a budgetary allocation of Rs 2.66 lakh crore for rural development, including spending on rural infrastructure. This allocation is expected to positively impact the rural economy, benefiting companies like M&M and Hero MotoCorp.

Finance Minister Nirmala Sitharaman announced a new water supply and sanitation plan for 100 cities as part of the Budget 2024. Companies in focus include Anthony Waste and VA Tech WABAG, which are expected to benefit from this initiative. The share of Anthony Waste and VA Tech WABAG gains over 3% to intra-day high on NSE.

The Nifty 50 was down 0.27% at 24,442, while the Sensex was down 0.24% at 80,309.81.

Shares of NTPC rose 2.20% from the day’s low after FM Nirmala Sitharaman announced the formation of a Joint Venture between these both. The JV to set up an 800 MW Ultra Super Critical Thermal Power Plant. The government will provide the necessary fiscal support for the same, the minister said while presenting the budget.

Mineral and mining stocks like NMDC steel, Gujarat Mineral Development rose higher between 2.29% – 0.21% after Nirmala Sitharaman, Finance Minister, said that the govt will soon conduct the first round of offshore mineral auction round under the mission for production, recycling of critical minerals, overseas acquisition of assets.