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Budget 2020 Market Highlights: Budget fails to cheer markets, Sensex cracks 988 points to settle below 40,000-mark

Share Market Budget 2020 Highlights: Everything that happened in the stock markets.

Written by Debashish Pachal | New Delhi | Updated: February 1, 2020 7:23:25 pm
BSE brokers trading while budget session is going on. (Express photo by Nirmal Harindran)

Budget 2020 Share Market Highlights: The benchmark equity indices on the BSE and National Stock Exchange (NSE) fell around 2.5 per cent on Saturday, the most in a day since November 2016 after Finance Minister Nirmala Sitharaman’s Budget 2020 proposals failed to cheer market participants.

The S&P BSE Sensex settled at 39,735.53, down 987.96 points (2.43 per cent), while the Nifty 50 slipped 300.25 points (2.51 per cent) to end at 11,661.85. During the intraday trade, the 30-share BSE benchmark fell as much as 1,092.25 points to 39,631.24, while the Nifty slipped to an intraday low of 11,633.30.

Generally, the markets are shut during the weekends, but they were open today on account of the Union Budget 2020.

Among the sectoral indices on NSE, the Nifty Bank index crashed 1,024.00 points (3.32 per cent) to settle at 29,809.60 weighed by State Bank of India (SBI), Bank of Baroda and ICICI Bank. Apart from the Bank Nifty, the Nifty Financial Services index slipped 558.55 points (3.90 per cent) to end at 13,758.35 weighed by SBI Life Insurance Company and Housing Development Finance Corporation. The Nifty FMCG index too slipped 556.65 points (1.81 per cent) to end at 30,218.65 weighed by ITC and Britannia Industries.

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In the broader market, the S&P BSE MidCap index ended at 15,119.65, down 342.36 points (2.21 per cent), while the S&P BSE SmallCap settled at 14,344.70, down 323.26 points (2.20 per cent).

Live Blog

Finance Minister Nirmala Sitharaman presented the Union Budget 2020 in the Parliament today, the stock market reacted to it by falling around 2.5 per cent. Here's everything that took place in the market today. Follow other live blogs on Income Tax, Budget 2020

16:41 (IST)01 Feb 2020
MARKET QUOTE | Dhiraj Relli, MD and CEO, HDFC Securities on today's market performance and Budget 2020

"The FM has done well in abiding by the fiscal prudence principles for FY21 and the targets set by her look achievable. But it will be crucial for her to stick to it for FY21, else the international rating agencies may have adverse views.

The markets have reacted negatively to the Budget, mainly due to some disappointments on account of non-abolition of LTCG, confusion about the impact of DDT removal and taxing dividends in the hands of recipients. Also the alternative provided to individuals for lower rate of tax, provided they do not claim exemptions/deductions, did not seem too attractive. The alternative tax system discourages investments which market participants do not seem to be comfortable with. The overhang of coronavirus outbreak on our markets also got magnified in the later half of the session. Foreign investors will look for signs of revival of growth before they commit funds.

The continuance of LTCG and now dividend taxation might not stimulate positive sentiments for the capital markets but the other themes in the Union budget show a clear thrust towards improving the competitiveness of Indian businesses and Indian citizens while providing liquidity in the hands of individuals. Whether this will result in consumption revival will be interesting to watch.

The markets will absorb the Budget effects in the next few days and in case the virus situation stabilizes, we may even see a bounce in the markets in the near term."

16:23 (IST)01 Feb 2020
MARKET QUOTE | Vinod Nair, Head of Research, Geojit Financial Services on Budget Day's market movement

"Budget was below the par considering that market had very high expectations from the government. Adding flexibility to fiscal deficit of FY20 is positive but extending the same to FY21 would have provided more confidence to the market. Income tax changes announced has come with riders of giving up exemptions which disappointed the markets, with insurance sector being impacted the most. Since the event is over, the focus will now turn to on going Q3 announcements and how global events unfolds in the near term."

15:42 (IST)01 Feb 2020
Equity markets at close

The S&P BSE Sensex settled at 39,735.53, down 987.96 points (2.43 per cent), while the Nifty 50 slipped 300.25 points (2.51 per cent) to end at 11,661.85.

15:32 (IST)01 Feb 2020
Anuj Puri, Chairman at ANAROCK Property Consultants reacting on Budget 2020

Positives:

  • Affordable Housing continues to be the government’s focal point for real estate. The previous tax exemptions for both homebuyers and developers have been extended for another one year.
  • Personal tax relief across various income slabs will invariably increase disposable income at the hands of the middle class, and boost their consumption capabilities. This benefit may, however, not percolate down to the housing sector as significantly as hoped for.
  • Abolition of DDT for corporates is another bold move that will help them to diversify or expand their business and also make India an attractive destination for investors, thereby boosting investments. This is definitely good news for commercial real estate.

Negatives:

  • Apart from the affordable housing push and personal tax relief, no major benefits came in for resolving the current housing mess. For instance, a hike in the INR 2 lakh tax rebate on housing loan interest rates under Section 24 of the Income Tax Act could have kick-started healthier demand for housing, especially in the affordable and mid-segment categories. But there was no announcement in this regard.
  • Also, the Budget missed any major announcement for easing liquidity in the real estate sector – a major worry for most developers. Project delays - the biggest fallout of the cash crunch – have severely dampened buyer sentiments. There was a dire need to address this concern immediately.
15:20 (IST)01 Feb 2020
India raises import tax on crude palm oil to 44 per cent

India has raised import tax on crude palm oil to 44% from 37.5 per cent, a government notification said on Saturday, as the world's biggest palm oil importer tries to boost local oilseed production.

The hike in import duty on palm oil could prompt buyers to increase purchases of rival edible oils such as soyoil and sunflower oil, traders said.

(Reuters)

14:30 (IST)01 Feb 2020
Nikhil Kamath, Co-founder, Zerodha and True Beacon reacting to Budget 2020

"Nothing substantial seems to have changed, for the government to expect a 10 percent nominal GDP growth rate continues to sound like hubris, the situation on the ground is a lot worse, the need of the hour might be to recognize the issues at hand and transparently deal with them.

Personal income taxes being cut do not make a substantial difference to consumption, the rich tax which has essentially with surcharges brought the effective tax rates to 42 percent for the highest bracket continues to be a big deterrent to consumption. This is not yielding substantial revenue gains for the government, and it might have been prudent to do away with this.

No word on a reduction in long term capital gains, this continues to move foreign capital to similar geographies in South East Asia, which do not tax long-term capital gains. We also didn't hear anything about Security transactions tax as STT continues to be the biggest deterrent in making our stock markets robust by adding a significant barrier to transacting frequently and thus increasing the impact cost around trading equities. rationalizing STT could make a plethora of day traders profitable and thus indirectly add significant no of jobs.

It doesn't seem to add up, the finance minister is painting a robust picture, but all participants involved understand the ground reality. We hope the trend changes and the government deals with the problems at hand in a transparent manner."

14:14 (IST)01 Feb 2020
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services reacting to Union Budget 2020

"Budget 2020 built on 3 themes of aspirational India, Economic development and caring India is a balanced exercise. The highlight is the proposed IPO of LIC. The changes in personal I-T is only marginal since the benefits will be available only to those who opt for no exemptions. Abolition of DDT is good for markets."

14:09 (IST)01 Feb 2020
Explained: Why LIC divestment is a big, bold decision but will need a law change first

Finance Minister Nirmala Sitharaman has said that the government will sell a part of its holding in Life Insurance Corporation of India (LIC) through an initial public offering (IPO). The government owns 100 per cent of LIC. Click here to read the story

13:53 (IST)01 Feb 2020
Budget 2020: FM Sitharaman on Dividend Distribution Tax (DDT)

  • Dividend Distribution Tax (DDT) abolished
  • Revenue loss of Rs 25,000 crore due to abolishing DDT

13:48 (IST)01 Feb 2020
Budget 2020: New tax scheme optional, without exemptions: FM Sitharaman

The new income tax schemes will be available for tax payers who are willing to forgo deductions and exemptions, Finance Minister Nirmala Sitharam said in her Budget 2020 speech.

13:41 (IST)01 Feb 2020
Budget 2020 markets: After slipping over 650 points, BSE Sensex trims some losses

The 30-share BSE benchmark has been trading on a volatile note in the afternoon trade, after slipping over 650 points, within minutes it trimmed some losses and was down around 550 points amid ongoing budget speech by Finance Minister Nirmala Sitharaman.

Source: BSE
13:28 (IST)01 Feb 2020
Budget 2020: FM Sitharaman on Income tax rates and slabs

  • No income tax for those with taxable income below Rs 5 lakh
  • New income tax rate: 10 per cent tax for income between 5 lakh to 7.5 lakh
  • New income tax rate: 15 per cent tax for income between 7.5 lakh to 10 lakh
  • New income tax rate: 20 per cent tax for income between 10 lakh to 12.5 lakh
  • New income tax rate: 25 per cent tax for income between 12.5 lakh to 15 lakh
  • New income tax rate: 30 per cent tax for income above 15 lakh

13:22 (IST)01 Feb 2020
Budget 2020: FM Sitharaman on banking sector

  • Government has infused Rs 3.5 trillion into public sector banks during the last few years
  • Government will amend Banking Regulation Act to strengthen the co-operative banks
  • A robust mechanism is in place to monitor the health of commercial banks
  • The deposit insurance coverage is increased to Rs 5 lakh from current Rs 1 lakh

13:16 (IST)01 Feb 2020
Budget 2020: Maket borrowings in FY20 stands at Rs 4.99 lakh crore

The total market borrowing during the current fiscal year (FY20) at Rs 4.99 lakh crore, FM Sitharaman said.

13:13 (IST)01 Feb 2020
Budget 2020: GIFT city to set up International Bullion Exchange

The GIFT City located in Gujarat will set up International Bullion Exchange

13:10 (IST)01 Feb 2020
Budget 2020: NRIs to be allowed to invest in certain categories of Government Securities

  • New debt ETF will be launched which will mostly consist of G-Secs, FM Sitharaman said.
  • Recent CPSE ETF has been a big success, FM said.
  • The FPI limit in the corporate bonds to be raised to 15 per cent from 9 per cent

13:04 (IST)01 Feb 2020
FY20 fiscal deficit seen at 3.8 per cent of GDP: FM Sitharaman

The FY20 fiscal deficit is seen at 3.8 per cent of GDP while the FY21 fiscal deficit target is expected at 3.5 per cent of GDP, Finance Minister Nirmala Sitharaman said during her Budget 2020 speech.

12:59 (IST)01 Feb 2020
Budget 2020: Govrnment proposes to sell part of its stake in LIC

Government proposes to sell part of its stake in LIC, plans to raise funds by offering IPO,  FM Sitharaman announced during her Budget presentation.

12:47 (IST)01 Feb 2020
The S&P BSE Healthcare index rises post FM's budget announcements for health sector

The shares of healthcare industry stocks were trading higher after Finance Minister Nirmala Sitharaman allocated Rs 69,000 crore for health sector. The S&P BSE Healthcare was up over 0.25 per cent.

Source: BSE
12:36 (IST)01 Feb 2020
Budget 2020: Rs 69,000 crore allocation for health sector

  • Finance Minister allocates Rs 69,000 crore for health sector
  • The centre will set up government panel hospitals in tier-II, III cities in 'aspirational' districts under Ayushmann Bharat scheme

On Friday, the S&P BSE Sensex settled at 40,723.49, down 190.33 points (0.47 per cent), while the Nifty 50 slipped below the 12,000-mark to end at 11,962.10, down 73.70 points (0.61 per cent).