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.
