Indian equity benchmarks ended mixed as rout in Adani Group shares in the second half of the day’s trading dwarfed the bold measures like capital expenditure hike and income tax rates rationalisation announced in Budget 2023-24.
The Sensex surged as much as 1,224 points and fell 1,956 points from the day's highest level to settle 158 points higher at 59,708 and Nifty 50 index touched an intraday high of 17,972.20 and low of 17,353.40 before ending 46 points lower at 17,616.
The markets reacted positively to measures like hike in capital expenditure to Rs 10 lakh crore, increase in capital outlay for railways at Rs 2.40 lakh crore and rationalisation of income tax slabs. However, the damage came after Adani Group stocks went for freefall after a report suggested that Credit Suisse assigned zero lending value to its bond. The global firm’s scrutiny of Adani Group bonds comes a day after Adani Enterprises’ follow-on public offer sailed through successfully due to the support from non-institutional investors.
Adani Enterprises shares crashed 28 per cent to close at Rs 2,128, Adani Total Gas dropped 10 per cent, Adani Green Energy tumbled 6 per cent, Adani Ports slumped 20 per cent, Adani Wilmar fell 5 per cent, Ambuja Cements tanked 17 per cent, ACC fell 6 per cent and NDTV tumbled 5 per cent.
Sharp selloff in PSU banks led to ripple effect in state-run lenders who have sizeable exposure to Adani Group and sent the measure of PSU banks crashing a whopping 9.5 per cent. Stocks such as Bank of Baroda, Canara Bank, Punjab National Bank, Union Bank of India, State Bank of India and Central Bank fell between 4-8 per cent each.
Meanwhile, investors were also seen booking profit ahead of the Fed interest rate decision, analysts said. "A well-tuned budget with strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting. Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool," said Vinod Nair, head of research at Geojit Financial Services.
Stock markets have reacted well to the provisions immediately due to absence of any major unexpected negatives and adherence to fiscal prudence, said Dhiraj Relli, managing director and CEO, HDFC Securities. The markets will now look forward to other triggers like the US Fed meet outcome, RBI's next MPC meeting and the balance Q3 corporate results, he added.
"In a nutshell, I would state this budget to be prudent, progressive and pragmatic," Relli noted.
From the Sensex pack, ITC, Tata Steel, ICICI Bank, Tata Consultancy Services, HDFC, HDFC Bank and Kotak Mahindra Bank were the major gainers. On the other hand, Bajaj Finserv, State Bank of India, IndusInd Bank and Mahindra & Mahindra were the prominent laggards.
"Overall, the budget is excellent. The absence of negative news is a tremendous source of optimism. And the stock market has been ecstatic about this budget," Sunil Damania, chief investment officer, MarketsMojo told PTI.
Finance Minister Nirmala Sitharaman on Wednesday tweaked the slabs to provide some relief to the middle class by announcing that no tax would be levied on annual income of up to Rs 7 lakh under the new tax regime.
"The government's relief on personal income tax by providing rebate upto Rs 7 lakh and making changes in the slab rate under the new income-tax regime comes as a major boost to the Indian markets. The FM did not tinker with the capital gains which has cheered the markets," said Sanjay Moorjani, Research Analyst, SAMCO Securities.
The budget also allowed a Rs 50,000 standard deduction to taxpayers under the new regime, where assessees cannot claim deductions or exemptions on their investments.
(With PTI inputs)