Mumbai: In a positive start to the trading day, the Indian stock market opened in the green on Thursday. The Sensex saw a modest gain of 6.75 points, opening at 71,729.64, while the Nifty rose by 5.95 points, commencing the day at 21,731.64. The market performance was indicative of a cautious optimism among investors.
Notably, among the Nifty companies, 22 witnessed advances while 27 registered declines. The top gainers included BPCL, Eicher Motors, Cipla, M&M, and Maruti. Conversely, the top losers comprised LTIMindtree, Titan, LT, Wipro, and Grasim. The positive trend comes on the heels of a challenging January for Indian indices, marked by a 0.5 per cent loss attributed to global cues and market volatility.
Varun Aggarwal, founder and managing director, Profit Idea, said, "Investors are keenly observing the upcoming Union Budget and the Federal Reserve policy meeting scheduled for January 31, anticipating their impact on the market". He added, "Analysts suggest that the budget is expected to focus on capital expenditure, manufacturing, and macro stability, with an emphasis on economic growth through increased capital investment. Sectors such as manufacturing and renewable energy are anticipated to receive additional stimulus.
Investors have been advised to position themselves in capital goods, industrials, and infrastructure sectors, expecting gains from the budget's emphasis on capital expenditure". The expansion of Production-Linked Incentive (PLI) programs to boost manufacturing is also expected. As the Interim Budget on February 1 approaches, economic indicators present a mixed picture.
While GST collections reached a second all-time high, the growth in output of eight core industries slumped. Key areas of focus during the budget announcement include Long-Term Capital Gains (LTCG), disinvestment, infra capital expenditure, and proposals for fiscal discipline.
Despite speculations about the budget being a vote on account, expectations run high for crucial announcements related to income taxpayers, salaried individuals, and sectors such as electric vehicles, real estate, cryptocurrency, and renewable energy. In the agricultural sector, which contributes 16% to the GDP, the focus is on achieving a $100 billion export target by 2030.
Real-time information, weather patterns, crop insurance, and export connectivity are identified as crucial areas. The proposed emphasis on plant-based proteins aligns with global trends and could position India in the USD 1.3 trillion Meat Industry. A separate PLI scheme for plant-based proteins is expected to boost the agri-processing sector. While positive changes are taking place on the national level, the effective dissemination of government plans, budgets, and grants at the local level remains a challenge, particularly concerning startup grants.
Expectations for the budget also extend to the travel and tourism sector, with hopes for a focus on new destinations, tourist hubs, and global prominence. Support in transportation, infrastructure, and remote accessibility is anticipated to catalyze tourism growth in offbeat locations. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "While both the Fed decision and the Budget will influence the market today, the focus will be on the Budget.
Even though the interim Budget is expected to be largely a vote on account with "no sensational announcements" the PM's statement yesterday that it will be a 'blueprint of intent' has aroused expectations that there will be some significant indications of what is likely to come in the full Budget and beyond. This will keep the market focused on the Budget".
He added, "The 1.61 per cent sell-off in the S&P 500 yesterday was in disappointment that rate cut will not happen in March. But the Fed chief's comment that the economy is doing well with 3.1 per cent GDP growth in 2023, low 3.7 per cent unemployment and consumer price inflation declining to 2.6 per cent augurs well for the market, going forward".
"Sectoral and stock-specific moves in response to budget proposals will hog the limelight today. But long-term investors should not be carried by the dramatic moves today and may focus on high quality stocks with good long-term growth prospects", he said. As the market awaits the budget announcement, investors and analysts remain cautiously optimistic about the future trajectory of the Indian economy.
Read More
