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Post-Budget Analysis: What It Means for the Stock Market

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Given that Union Budget 2024 is the first full budget of the Modi 3.0 government, expectations were high that the budget would provide a vision for the Indian economy. Therefore, the budget announcements that provide a boost to agriculture and the rural economy are on expected lines because they will help improve the income of rural households.

Similarly, the tax relief that the finance minister has provided to salaried individuals by hiking the standard deduction limit and changing the tax rates under the new tax regime are positive moves for the middle class. That said, these announcements are slightly lower than budget expectations because people were expecting the government to increase the standard deduction limit to Rs. 1 lakh.

Several experts were expecting the government to adopt the path of fiscal consolidation. This is what Ms. Sitharaman has done by announcing an estimated fiscal deficit of 4.9% of India’s GDP. However, a few announcements are hurting the stock market.

Among these, the most prominent are those that have caused an increase in long-term capital gains (LTCG) tax from 10% currently to 12.5% on financial and non-financial assets and an increase in short-term capital gains (STCG) tax from 15% to 20%. When the Finance Minister announced these moves, the benchmark indices started falling.

At Bajaj Broking, we genuinely believe that BudgetSimpleHai! Hence, in this blog, we’ll provide post-budget analysis in a simple manner. We’ll also explain how the share market is expected to perform post budget.

Overview of the Union Budget 2024

1.The Union Budget 2024 was on the expected lines, particularly, on the rural sector because the government has given a major boost to agriculture, rural employment, and rural households.

2.While the budget has provided tax relief to the salaried class, expectations were of much higher tax relief.

3.While the taxpayers will save by paying lesser income tax than earlier, they may have to pay a higher tax on LTCG and STCG.

4.The best news is that the government is well on track for fiscal consolidation. The fiscal deficit is on expected lines, which means neither the government’s income nor its expenditure is likely to shock the stock market.

#BudgetSimpleHai

The Union Budget 2024 is mostly on the expected lines. The government has given a boost to the rural economy and agriculture. Overall, it’s a decent budget for the stock market.

  • While the government has increased the standard deduction limit from Rs. 50,000 to Rs. 75,000, people were expecting a bigger increase.
  • The increase in taxes on long-term and short-term capital gains is a negative move for the stock market.
  • An estimated 4.9% fiscal deficit of GDP means that the government’s finances are under control. Hence, it’s good for the stock market.

 

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

Key Stocks to Watch Post-Budget in the Share Market

Post budget, the stocks of these companies are to watch out for in the share market:

1.Housing finance: The budget has announced 3 crores of additional houses in rural and urban areas under Pradhan Mantri Awas Yojana (PMAY). Therefore, more people are likely to take home loans. Companies that provide loans for affordable housing, like Aavas Financiers, Aptus Value Housings, and Aadhar Housing are likely to gain.

2.Infrastructure: The budget has made it clear that the government’s focus will remain on infrastructure. Many announcements were made for new airports, medical facilities, and sports infrastructure. Therefore, stocks like Larsen & Toubro (L&T), KNR Constructions, PNR Infratech, Kumar Infraprojects, and Ahluwalia Contracts may gain.

3.FMCG: The Finance Minister has tried to make things easier for rural and urban consumers. Be it giving a boost to agriculture and employment or reducing the income tax burden, the government wants the average person to have more money. Therefore, people will be able to save and spend more on consumer goods. Hence, companies like HUL, Tata Consumer, Dabur India, and ITC are likely to do well.

Conclusion

For equity investors in the Indian stock market, this budget was mostly on the expected lines. While an increase in tax on LTCG and STCG is seen as negative, the budget is mostly a cautious one. A post-budget analysis reveals that the government has decided to spend more on agriculture, infrastructure, and the rural economy.

Besides, it has also announced moves to support employment generation in the manufacturing sector. At 4.9% of GDP for FY 2024-25, the fiscal deficit seems to be in control. Overall, the Indian economy seems to be in good shape and the budget has not affected the fundamentals much. Therefore, investors can wait and watch with their investments, instead of suddenly increasing or reducing their exposure to certain stocks.   

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

Which sectors are expected to benefit the most from the budget?

Answer Field

The sectors expected to benefit most from the budget are housing finance, infrastructure, and FMCG.

How should investors adjust their portfolios in response to the budget?

Answer Field

Investors should carefully figure out companies from housing finance, infrastructure, and FMCG sectors that can gain from the budget in the long run. After that, they can increase exposure to such companies.

What are the key stocks to watch after the budget announcement?

Answer Field

Key stocks to watch out for are Aavas Financiers, Aptus Value Housings, and Aadhar Housing (housing finance sector), Larsen & Toubro (L&T), KNR Constructions, PNR Infratech (infrastructure sector), and HUL, Tata Consumer, Dabur India (FMCG sector).

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