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Thursday, March 04, 2021

Spending, privatisation, bad bank plans fuel 5% jump

Led by finance and banking shares, the Sensex shot up by 2,315 points, or 5 per cent, to 48,600.61 and the NSE Nifty Index soared 647 points, or 4.74 per cent, to 14,281.20 in the buying euphoria.

Written by George Mathew | Mumbai |
February 2, 2021 2:14:48 am
budget 2021, budget, budget 2021 highlights, budget highlights, budget 2021 india, budget and markets, business markets, sensex, farm laws, indian express newsIndeed, as the Sensex cheered the Budget, Opposition leaders alleged the Government was selling the family silver via privatisation and asset monetization.

Stock markets on Monday cheered the Union Budget with the Sensex jumping five per cent — its biggest Budget day gain after 1997. Finance Minister Nirmala Sitharaman’s proposals buoyed the sentiment with investors jumping on to the buyers’ bandwagon.

Led by finance and banking shares, the Sensex shot up by 2,315 points, or 5 per cent, to 48,600.61 and the NSE Nifty Index soared 647 points, or 4.74 per cent, to 14,281.20 in the buying euphoria.

The biggest rise in the Sensex was recorded on February 28, 1997, when the then Finance Minister P Chidambaram announced the UPA government’s “dream Budget” and the Sensex and Nifty gained over 6 per cent. In 2001, the 30-share index soared by 4.36 per cent. In February 2020, the Sensex gained 2.43 per cent and in the previous five years, the Sensex made only marginal gains. The Sensex had fallen 8 times in the last 22 Budget days.

On Monday, the rally was led by finance and banking shares. The BSE finance index gained 7.49 per cent and the bank index shot up 8.33 per cent as proposals like the formation of bad bank, development financial institution and bank privatisation fuelled the rally.

Stock markets experts are bullish about the way forward for the markets. “Growth oriented Budget will support equity market. Asset monetisation, strategic divestment, auto scrappage policy are positive for the market. The fixed income market will look forward to the RBI’s monetary policy as the gross borrowing programme was little on the higher side. The Budget has laid foundation for growth beyond FY22 through selective protection to domestic industry and encouragement via PLI scheme,” said Nilesh Shah, group president and MD, Kotak Mahindra Asset Management Company.

Analysts said the FY22 budget has been much better than the market’s expectations. The feared and anticipated measures around Covid-cess, higher capital gains tax and wealth tax did not materialise much to the relief of the investors. “While one needs to wait for the fine print, yet one can say that broadly the markets will be happy with the budget given the overall direction of the Budget indicated by government’s decision to privatise two PSU banks and one insurance firm, create an ARC and AMC to manage stressed assets, no increase in direct and indirect taxes and FDI up to 74 per cent in insurance companies,” said Waqar Naqvi, CEO, Taurus Mutual Fund said.

According to Motilal Oswal, MD & CEO, Motilal Oswal Financial Services, the Budget will provide a huge relief to market and economy and help in sustaining the buoyant sentiments in the economy. The government has clearly articulated the focus towards infra and capex spending with five key measures: Capex spends proposed to go up by 26 per cent, setting up of Development Financial Institution, setting up of ARC/AMC to deal with stressed assets, asset monetization plans in various segments and list of CPSEs for divestments.

Jaspal Bindra, Executive Chairman, Centrum Group, said the Budget struck the perfect balance between maintaining investor sentiment, reducing fiscal deficit, boosting job creation and increasing Government spending.

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