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Market Reactions: Post Union Budget 2024 Analysis??

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Union Finance Minister Nirmala Sitharaman took the spotlight today, July 23, 2024, presenting the Union Budget 2024-25. This marked her seventh consecutive Budget, smashing records. Before her, Morarji Desai held the six-time streak, but he still holds the title for most Budgets presented at 10, with P. Chidambaram close behind at 9. Budget history just got a whole lot more interesting! As an investor, if you have been keeping a watchful eye on this historic budget, we have here everything you need to know.

Stock-specific reactions hinged on the Budget proposals for various sectors. Meanwhile, earlier today, the Indian stock market wiped out its early gains as caution took hold ahead of the Union Budget. Although the NSE Nifty 50 and S&P BSE Sensex initially opened about 0.3% higher, they were trading flat at 24,516.65 points and 80,553.96 points, respectively, by 9:40 am.

Key Highlights and Fiscal Policies Post Budget 2024  

The budget expertly balances welfare spending, capital expenditure, and fiscal discipline, with significant funds for women, MSMEs, and agriculture. While maintaining a 4.9% fiscal deficit is commendable, the increased capital gains and securities transaction taxes dampen market sentiment.

Here are the highlights post budget 2024:

  • The proposed increasing taxes on capital market gains,
  • To curb excessive F&O trading, FM proposed raising the Security Transactions Tax (STT) to 0.02% and 0.1%, doubling the tax for equity and index trades
  • With this move, the government aims to reduce speculative trading activities
  • The FM announced that short-term gains on specific financial assets will now be taxed at 20%
  • Long-term gains on all assets will now be taxed at 12.5%
  • The capital gains exemption for lower and middle-income classes is raised to ₹1.25 lakh per year
  • The market initially dropped due to the LTCG tax hike but recovered slightly by 1:10 pm, with the Sensex and Nifty 50 down only half a per cent
  • Experts believe the tax increase is modest and won't significantly affect market sentiment.
  • The fiscal deficit for the financial year 2024-45 has been at 4.9% of GDP, with plans to further lower it to below 4.5% in the year 2025-26.
  • The focus is on enhancing fiscal discipline and managing expenditures effectively to reach this goal, intending to boost economic stability and growth in the future.

Sector-wise Market Performance and Impact Analysis over Budget

The Budget 2024 has marked its bold choices to make India “Atma Nirbhar”. As an investor or trader, you can focus on these markets as with ample fund allocation, the share prices are bound to increase.

Agriculture Setups

The Budget 2024 opened its intentions to allocate a considerable fund, i.e. ₹1.52 lakh, crore in the agricultural sector particularly for bringing productivity and resilience. Investors can hedge their way to profit by investing in agricultural setups working primarily in the production of oil seeds, mustards, soybeans, shrimps and green vegetables. Additionally, the fund allocation to domain experts in both the private and public sectors has opened up a wide window.

Infrastructure Market

The government has laid special emphasis on infrastructural development projects and promised additional support for capital investment in the related areas. Special attention to infrastructural development for connectivity and tourism is set to push the stocks in the market higher. Keep an eye out for the power projects as 2400 MW power plants are to be created. Infrastructure development post budget 2024 is already showing signs of a positive growth in the stock market.

Manufacturing and MSMEs

The 2024 budget announcement has kept manufacturing and MSMEs in its top 9 priorities with special attention to financing and technological advancements. As expected, MSMEs will receive a separate guarantee fund providing ₹ 100 crore to support credit demand and asset quality for lenders.

Skilling and Employment Sector

With the introduction of three major schemes to employment-linked incentives, investors are eyeing stocks in the field. Additionally, the allocation of 2 lakh crores for upskilling and providing jobs to 4.1 crore youth has opened doors of profit through stocks of companies engaging in skill development.

Pharma and Healthcare

Pharma and Healthcare have gained a considerable fund allocation with a 12% increase and exciting tax exemptions to grab the attention of investors post budget 2024. 

#BudgetSimpleHai

The buzz around the historic 2024 Union Budget continued through the FM’s speech. Here are the highlights:

  • The fiscal deficit is maintained at 4.9% of GDP, with plans to lower it to below 4.5% next year
  • Increased taxes on capital gains and Security Transactions Tax to curb speculative trading
  • Capital gains exemption for lower and middle-income classes raised to ₹1.25 lakh a year
  • The market reacted with initial drops but recovered slightly, with a modest tax impact on sentiment.

 

To simplify this year’s Budget and to decode its impact on your life, your investment portfolio, and all that you do, we bring you #BudgetSimpleHai!


Join us on our website or head over to any of our social handles to get the latest updates on the Union Budget as it happens. Read in-depth reports, watch videos, and get a clear understanding of what’s in store.

 

Kyunki Bajaj Broking ke saath, #BudgetSimpleHai

Stock Market Response and Trends   

The 2024 budget is being considered a well-planned economic statement that can impact the stock market for positive results. Here’s how:

  • Agricultural stocks are rallying with around a 10% increase in value.
  • Stocks of Andhra Pradesh companies and businesses have showcased an impressive gain after ₹15,000 crores to Amravati.
  • The value of gold and silver stocks is set to skyrocket, post budget 2024,  as the customs duty has been brought down to 6%.
  • The stock market is hostile in terms of capital gains as the Finance Minister has announced an increase in capital gain taxes. This also led to the decline of the Indian rupee to a value of ₹83.69 against the US dollar.

Investor Strategies Post-Budget  

As the 2024 budget marks the inauguration of New India, investors can also mould their strategies by focusing on key areas post budget 2024:

  • Focus on the agricultural sector, particularly in businesses working towards
  • Infrastructure development sectors particularly in Bihar as the Finance Minister has announced the allocation of a whooping ₹26,000 crores. 
  • Investors can explore the medicinal landscape especially after the budget has relied on medicines, and medical equipment along with exemptions on three medicines for cancer patients.
  • This might be a great opportunity for investors to turn their way towards gold and silver stocks with custom duty coming down to 6% from 15%.

Conclusion  

At the start of the Parliament’s Budget session, Prime Minister Modi highlighted the significance of the occasion and extended his greetings to the nation. He noted that it was the first time in 60 years that a government would present its Budget for the third term. Emphasising the Budget's importance for the Amrit Kaal, Modi stated it would set the direction for the next five years and form the foundation for the 'Viksit Bharat' vision.

As expected, there will be a continued focus on record capital expenditure with a special emphasis on infrastructure.  Using the vision of 'Viksit Bharat 2047' as its roadmap, this ambitious Budget 2024 has aimed to guide the country’s economic and infrastructural strategies over the coming decades.

By aligning budgetary priorities with this vision, the government has sought to lay a strong foundation for sustainable growth and development. The Budget has focused on key areas such as infrastructure, innovation, and fiscal responsibility to help realise the goal of a developed India by 2047.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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Frequently Asked Questions

What are the major highlights of Union Budget 2024?

Answer Field

The budget 2024 spoke about its 9 key areas of focus including Productivity and resilience in Agriculture, Employment and skilling, Inclusive, HRD and social justice, Mfg & services, Urban Development, Energy security, Infrastructure, Innovation, R&D and Next generation reforms. Post-budget announcements, agriculture, MSMEs, infrastructure and power project sectors are expecting positive responses in the stock market.  

How did the stock market react immediately after the announcement of the Union Budget 2024?

Answer Field

The Indian share markets crashed significantly as the government proposed raising taxes on trading derivatives and capital gains. As the Union Finance Minister Nirmala Sitharaman concluded presenting the Union Budget, the S&P BSE Sensex and NSE Nifty 50 dropped around 1% each, trading at  80,024 and 24,225 respectively.

Which sectors experienced the most significant changes post-Budget 2024?

Answer Field

The union budget 2024 has impacted every key sector in the economy. However, with a massive fund allocation in agriculture, infrastructure and skill development, these sectors are set to mark a rapid increase in stock values. 

What are the long-term implications of Union Budget 2024 on the Indian economy?

Answer Field

With the increase in capital gain taxes, the Indian economy might face another grave inflation hit. However, with positive developments in employment, infrastructure, MSME credit and agriculture, the Indian economy is set to mark its way to self-reliance. 

How can investors adjust their strategies based on the post-budget market reactions?

Answer Field

The 2024 budget lures investors to focus on key areas- Agriculture, Pharma and Healthcare, Consumer Goods, Infrastructural development and MSMEs. The stock market has been showing positive trends for assets in these sectors specifically that investors can benefit from. 

Are there any specific stocks to watch following the Union Budget 2024?

Answer Field

With the Union Budget emphasising the development of sectors like agriculture, energy and infrastructure, you may consider looking at the stocks and share prices of these industries. For example, agricultural stocks like Kaveri Seeds and Dhanuka reflect more demand post the agricultural capital allotment announced in Budget 2024-25. Plus, you can consider energy stocks like JW Energy, Adani Power, or NHPC that are positively reacting to the budget announcements. 

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