A look at the impact of budget announcements on the market as a whole and stocks in particular
Key Takeaways from FM Nirmala Sitharaman's Budget 2020 Speech:
Comprehensive measures for 100 water-stressed districts -- expect water-related companies to benefit going forward like VA Tech Wabag, Ion Exchange, Thermax
Solar power generated by farmers from barren land will be encouraged -- solar equipment companies to gain. However, implementation will be an issue unless farmers are given a subsidy to install solar plants.
Facilitating doubling of milk production -- will negatively impact milk companies as supply increases but prices will fall. If milk prices are controlled as is the case with some states, state deficits will take a hit. However, companies dealing with cattle feed and veterinary medicines will gain.
Expanding fish production capacity -- will benefit companies like Avanti Feeds
Strengthening of TB campaign to benefit Lupin the leader in the therapeutic segment
Technical textile exports promotion -- Garware Wallropes is a strong player in that space
Markers remain flat as the finance minister continues with her speech. Movement is seen in stocks that are expected to benefit from the announcements made
Accelerated development of highways to be taken -- lookout for road development companies including cement and steel companies
Railway measures --
Setting up a large solar power capacity -- a big boost for solar companies
100 more airports to be developed with aircraft fleet size increasing from 600 to 1200 -- companies offering airport infrastructure and
A big announcement in electricity -- smart meters with the freedom to choose the supplier -- space will get more competitive, bigger and better-managed companies will gain. Tata Power stands out among the private sector players
Gas grid to be expanded -- all stakeholders like pipeline suppliers, GAIL, port facility and gas importing companies to benefit
Building Data Center Parks to be promoted will help Indian IT companies to expand their Data science business division
Rs 6,000 crore for Bharat Net to help optic fiber companies like Finolex Cables and Sterlite Technologies
Reforming power sector distribution companies has been a favorite theme of finance ministers though little changes on the ground. Details of the measures have to be watched, but all stakeholders including cable supplier, to companies involved in providing distribution equipment like meters, transformers to benefit
Rs 2,500 crore allocated for Tourism promotion along with setting up Museums and promoting Archeological sites to help the Hotel sector, though the amount is too small given the size of the industry
Tax reduced and new tax slabs announcedIncome tax reduced to 10 percent between Rs 5-7.5 lakh
From Rs 7.5 - 10 lakh at 15 percent from 30 percent
From 10-12.5 lakh at 20 percent from 30 percent
From 12.5-15 lakh at 25 percent from 30 percent
Above Rs 15 and above 30 percent
Individuals are allowed to follow the old one and the new ones
Government to finally list LIC. The IPO will have an impact not only on the competing insurance companies but on the whole market. Given the likely valuation of LIC the market cap of the index will increase substantially.
Debt market to be deepened by announcing NRI's to invest in a certain scheme and launching of Debt ETF
Dividend Distribution Tax has been removed. A move much needed by the market.
Holding companies to gain from concession of dividends from subsidiaries
Affordable housing -- deduction of Rs 1.5 lakh announced has been extended by one more year. Affordable Housing projects to get tax holiday for one more year subject to getting clearance by March 2021. Small demand for the real estate sector is met, no wonder the Real Estate stocks are being hammered.
Markets at the lowest point of the day. All sectors in the red. Realty index falls over 5 percent Media index falls over 3 percent, followed by 2.8 percent by Metals and 2.37 percent in the Banking index.
In a move to ease litigation the finance minister has introduced Direct Tax Dispute Settlement Scheme where penalty and interest will be waived.Overall the budget has not delivered on many fronts apart from reducing personal tax, but these too will be set off against the waivers.