Sensex see-saw on Budget day: Up 2 per cent, ends flat

While Finance Minister Nirmala Sitharaman’s announcements on capex push, income tax reliefs and fiscal deficit at 5.9 per cent for 2023-24 provided strength to the market, it witnessed profit booking after the Budget announcements, leading to a decline.

In contrast, the broader NSE Nifty declined 45.85 points or 0.26 per cent to end at 17,616.30. (File photo)

5 min readNew DelhiFeb 2, 2023 07:22 AM IST First published on: Feb 1, 2023 at 03:24 PM IST

THE BENCHMARK Sensex at the Bombay Stock Exchange swung 1,957 points on Wednesday hitting an intra-day high of 2 per cent at 60,773 during the day, before falling to a day’s low of 58,816. It closed the day at 59,708 with a marginal gain of 0.27 per cent. The broader Nifty, however, closed the day at 17,616, witnessing a fall of 0.26 per cent.

While Finance Minister Nirmala Sitharaman’s announcements on capex push, income tax reliefs and fiscal deficit at 5.9 per cent for 2023-24 provided strength to the market, it witnessed profit booking after the Budget announcements, leading to a decline.

Also Read | Union Budget 2023 | 3 big takeaways: Capex, fiscal prudence, new Income Tax regime

The pressure also came from a sharp decline in shares of insurance companies following anxiety that the tweaking in the new tax regime may reduce the demand for life insurance products on account of tax-saving. A sharp decline in Adani Group stocks, that closed flat after having risen significantly earlier in the day, was a contributing factor.

Spoiling the mood of optimism generated by the Union Budget in the stock markets, Adani Group companies on Wednesday crashed by as much as 28 per cent, after reports that Swiss lender Credit Suisse Group AG announced that it has stopped accepting bonds of Adani Group companies as collateral for margin loans to its private banking clients.

The Adani sell-off hit the entire market sentiment and the index. With today’s fall, the market value of Adani companies has fallen by over Rs 7 lakh crore in the selling triggered by the Hindenburg Research report, which accused the group of “brazen stock manipulation and accounting fraud”.

Read | Budget’s good economics: No shadow of 2024, light of fiscal prudence

Adani Enterprises plunged by 28.45 per cent, Adani Port crashed by 19.69 per cent, Ambuja Cement by 16.56 per cent, Adani Total by 10 per cent, ACC 6.34 per cent and Adani Power and Adani Wilmar 5 per cent each. Banking stocks also came under pressure.

“Markets initially welcomed the Budget with enthusiasm. Later, the Adani Group stole the stage when its stocks crashed, significantly depressing market sentiment. Although tonight’s FOMC meeting is significant, the Adani drama is the main event that the market will be focusing on,” said Parth Nyati, Founder, Tradingo.

According to Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services Ltd, Nifty opened gap up and inched higher after the Finance Minister announced a progressive Budget. However, the index soon witnessed selling pressure amid sharp decline in PSU banking stock and Adani Group companies, after Credit Suisse Group AG’s reported decision.

Markets also noted the Budget announcement that the government has estimated the fiscal deficit for 2023-24 at 5.9 per cent of the GDP and remains committed to bringing the fiscal deficit down to 4.5 per cent of the GDP by 2025-26, and cheered the hike in capital investment outlay by 33 per cent to Rs 10 lakh crore, which will account for 3.3 per cent of the GDP.

The Credit Suisse move is being seen as a sign that scrutiny of the Adani Group finances is growing. The Swiss lender’s private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai Ltd, according to a Bloomberg report. It had previously offered a lending value of about 75% for the Adani Ports notes, it said.

Union Budget 2023: All you need to know