Union Budget 2024: Here's how Indian stocks reacted

On Tuesday, Indian stock markets displayed varied movements, with shares experiencing minor gains and losses in response to the Union Budget 2024 announcement. The budget's impact was felt across different sectors, showcasing a mixed reaction from investors.

Consumer Stocks Surge

Consumer stocks led the market higher, driven by the government's financial support for the sector. This assistance boosted investor sentiment and provided some stability to the market amid budget uncertainties.

Market Reactions and Trends

Historically, the stock market tends to experience wild swings around the Budget announcement but often settles into a more stable pattern afterwards. However, there is potential for substantial returns in the coming weeks, particularly in sectors like infrastructure, capital expenditure, and manufacturing¡ªoften referred to as "Modi stocks" due to their association with government policies.

Indian Rupee and Capital Gains Tax Impact

The Indian rupee fell to a record low of 83.69 against the US dollar following the budget announcement, surpassing the previous low of 83.6775. This decline came after the government proposed an increase in the tax rate on capital gains, which affected local equities.

Key Stock Performances

Agriculture Stocks

The Finance Minister¡¯s allocation of Rs 1.52 lakh crore to the agriculture sector resulted in a notable rally in agriculture stocks, with some rising up to 10%. Leading gainers included Kaveri Seed Company Ltd, Coromandel Agro Products and Oils Ltd, Dhanuka Agritech Ltd, and Nova Agritech Ltd.

Capital Goods Sector

Conversely, capital goods stocks such as Larsen & Toubro, ABB India, Thermax, and Siemens experienced declines between 1.5% and 5%. This drop followed the government's decision not to increase spending on infrastructure, with L&T being a notable Nifty 50 loser.

Real Estate and Housing

The Finance Minister's proposal to allocate ?10 lakh crore to support one crore low-income families in buying homes is expected to boost the demand for residential properties. This move benefits real estate developers like DLF, Macrotech Developers, and housing finance companies such as Aadhar Housing Finance and Aptus Value Housing Finance.

Jewellery Stocks

The reduction in basic customs duty on gold and silver to 6% drew attention to jewellery stocks. Companies like Titan Company Ltd., PC Jeweller Ltd., and Senco Gold Ltd. saw gains as a result.

Infrastructure and Urban Development

Shares of Andhra Pradesh-related stocks rose by up to 5% following the announcement of ?15,000 crore for Amaravati. Stocks of NBCC India and Housing and Urban Development Corp (HUDCO) are expected to remain in focus due to various infrastructure projects outlined in the Budget 2024, including ?10 lakh crore for urban housing and ?26,000 crore for highway projects in Bihar.

Energy Sector

Power stocks saw an uptick as the Finance Minister outlined measures to support renewable energy and nuclear power. The new initiatives include the Pradhan Mantri Suryaghar Yojana, which aims to provide free electricity of 300 units per month to one crore households. The budget also featured a pump storage policy to promote renewable energy and advancements in nuclear reactor research.

Cruise Tourism

Finance Minister Nirmala Sitharaman's Budget 2024 also highlighted the potential for cruise tourism in India. A simpler tax regime for foreign companies and a significant increase in funding¡ªapproximately ?2,450 crores¡ªaims to boost employment and tourism. This announcement led to gains in stocks related to cruise tourism, such as Yatra Online, Easy Trip Planners, EIH, Thomas Cook, and Praveg.

Overall, the Indian stock market¡¯s reaction to the Budget 2024 showcases a diverse range of impacts across different sectors, with some gaining and others experiencing setbacks. The evolving trends and responses indicate a complex interplay between government policies and market dynamics.