Budget 2024 – A Deep Dive into India’s Economic Blueprint | Weekly Update July 26th
Hello, Readers!
While the budget on Tuesday drew in mixed reactions, experts believe that beneath the surface lies a blueprint for India’s economic future. From infrastructure spending to tax reforms, the budget touches every aspect of our lives. Want to know how it impacts you? Let’s delve into the little details right after we review some weekly market highlights.
🧾In this Article
📈Weekly Market Wrap-up
While budget weeks can be volatile in the market, the Indian stock market displayed a strong performance this week, with both the SENSEX and NIFTY indices closing in the green. The SENSEX climbed by ₹728.07 to end at 81332.72, registering a 0.9% weekly increase. Similarly, the NIFTY surged by ₹303.95 to settle at 24834.85, marking a 1.24% week-on-week rise.
The Indian markets ended with gains for the eight straight week, longest weekly winning streak in the last 8 years. While the markets turned extremely volatile on the budget day, to end the day in green, participation from the domestic institutions fueled the rebound and helped key benchmark indices end the week with strong gains.
Sector Spotlight:
The Indian market witnessed a strong week across various sectors. IT stocks led the charge, with the BSE IT index climbing 2.99% to 41836.85. FMCG also performed well, gaining 2.88% to reach 22693.08. Rally in the FMCG stocks was driven by the budget, where the government prioritised enhancing rural consumption through increased allocations for various rural schemes.
The BSE CG index saw a modest rise of 2.51% to 73396.26. However, the real outperformers were BSE CD and BSE HC, surging 4.7% and 5.3% respectively. BSE CD closed at 60202.03, while BSE HC ended at 40176.85.
Nifty 100 Top gainers:
- Tata Motors = ₹1118.4 (▲+12.98%)
- ICICI Pru Life = ₹725.45 (▲+12.86%)
- Tata Motors – DVR = ₹763.6 (▲+12.78%)
- HDFC Life Insur. = ₹703 (▲+10.53%)
- United Spirits = ₹1420.85 (▲+9.49%)
Nifty 100 Top losers:
- IRFC = ₹183.45 (▼-10.84%)
- Axis Bank = ₹1177.6 (▼-8.86%)
- Wipro = ₹525 (▼-5.79%)
- Nestle India = ₹2478.7 (▼-4.63%)
- Bajaj Finserv = ₹1582.3 (▼-3.5%)
FII and DII Activity:
Domestic Institutional Investors (DIIs) were net buyers for the week, injecting ₹8,109.78 crore into the market. Their buying activity was consistent throughout the week, except for a minor outflow on July 22nd. Conversely, Foreign Institutional Investors (FIIs) were net sellers, withdrawing -₹4721.26 crore over the week. Their selling pressure intensified towards the end of the week, following a net inflow on July 22.
| Date | FII Net Activity | DII Net Activity |
| 22-Jul-24 | ₹3444.06 | -₹2,975.31 cr |
| 23-Jul-24 | ₹1418.82cr | -₹2,975.31 cr |
| 24-Jul-24 | -₹5130.90 cr | ₹3137.30 cr |
| 25-Jul-24 | -₹2605.49 cr | ₹2431.69 cr |
| 26-Jul-24 | ₹2546.38 cr | ₹2774.31 cr |
| Total | -₹4721.26 | ₹8109.78 cr |
Global Gossip:
US equities closed with a mixed performance. The Dow Jones gained 0.75%, while the S&P 500 saw a modest decline of 0.83% and
the FTSE saw a gain of 1.59%. The Nasdaq dropped significantly by 2.08%. European markets ended the day with a mixed performance.
DAX gained 1.35%, but CAC fell slightly by 0.22%. Asian markets experienced a downturn. Hong Kong’s Hang Seng plunged 2.28%,
Shanghai Composite tumbled 3.07%, and Jakarta Composite dipped marginally by 0.09%.
The European Central Bank kept its key interest rate unchanged, staying in a holding pattern for now after announcing an initial rate cut at a meeting last month.
Rupee Report:
The Indian rupee hit a record low of 83.72 against the US dollar on July 26, depreciating by two paise from the previous closing of 83.6975. This marks the fourth consecutive week of decline, with a weekly loss of approximately 0.1%. The weakening rupee is attributed to increased dollar demand from domestic oil companies and custodial banks, coupled with investor risk aversion. Additionally, outflows from Indian equities, volatility in the Chinese yuan, and the Reserve Bank of India’s potential to allow slight currency depreciation to correct overvaluation have contributed to the rupee’s decline.
Gold Surges:
Gold experienced notable volatility. Spot gold fell 1.2% on Thursday, marking its lowest level since July 10, as investors took profits and awaited key US data. However, gold prices rebounded on Friday, reversing a three-session decline. In the local market, gold rose by ₹50 to ₹70,700 per 10 grams, driven by a strong global trend. This followed a closing price of ₹70,650 per 10 grams the previous Thursday. Despite the mid-week drop, the metal’s recovery highlights its continued appeal amid fluctuating market conditions.
🍟 Quick Bites
📈 US GDP accelerated to 2.8% in Q2 from 1.4% in Q1.
🤝 Jio Things and MediaTek will collaborate on new technologies for Indian two and three-wheelers.
🌍 India’s passport ranked 82nd globally, while Singapore reclaimed the top spot.
🚗 Porsche India’s sales surged 40% to 489 units in the first half of 2024.
📊 India’s PMI jumped in July, with manufacturing and services sectors expanding.
🚀 India’s startup ecosystem has exploded, with 1.17 lakh recognized startups creating over 12 lakh jobs since 2016.
✈️ Air India will launch A350 flights on Delhi-New York and Delhi-Newark routes in November 2024 and January 2025 respectively.
🔎 Stocks in news
💵 SAIL has approved raising ₹2,500 crore through a private placement of debt.
🤝 SBI and UK’s FCDO will jointly invest ₹8,102 crore under a signed MoU.
💊 Zydus Lifesciences secured US FDA nod for its hypertension drug, Valsartan.
🌊 Oil India contracted Dolphin Drilling for Andaman offshore exploration.
🛢️ ONGC Videsh acquired Equinor’s stake in an Azerbaijan oilfield for $60 million.
📈 1QFY25 key results this week
📈 Airtel Africa reported a net profit of $31 million for the April-June quarter (from a loss of $151 million last year) with ARPU up 9.3%.
🌿 Adani Green’s net profit soared 94.74% year-on-year to ₹629 crore in the April-June quarter.
🍫 Nestle India posted a 6.62% year-on-year increase in quarterly net profit to ₹744.6 crore.
🚀 Tech Mahindra’s quarterly net profit jumped 22.96% to ₹851.5 crore.
⚡ Adani Energy swung to a quarterly net loss of ₹823.92 crore from a profit of ₹175.06 crore last year.
🏦 Canara Bank’s quarterly net profit grew 11.30% to ₹3,977.22 crore.
🚚 Ashok Leyland’s quarterly net profit declined 8.82% to ₹525.58 crore.
🏗️ L&T’s net profit increased 12% year-on-year to ₹2,786 crore in the April-June quarter.
🏦 Axis Bank’s net profit rose 4% year-on-year to ₹6,035 crore in the April-June quarter with net interest income up 12% to ₹13,448 crore and net loans sanctioned increasing 14.16% to ₹9.8 lakh crore.
📈 Bajaj Finserv’s net profit climbed 10.04% year-on-year to ₹2,137.7 crore in the April-June quarter with net interest income surging 27.96% to ₹15,522 crore.
💰 SBI Life’s net profit surged 36% to ₹520 crore in the April-June quarter with assets under management growing 26% to ₹4.14 lakh crore.
📊 Bajaj Holdings’ quarterly net profit rose 13.77% to ₹1,610.46 crore.
🛢️ Petronet LNG’s quarterly net profit increased 44.53% to ₹1,141.58 crore.
⚙️ Sona BLW’s quarterly net profit climbed 27% to ₹142 crore.
🏦 Federal Bank’s quarterly net profit grew 18.25% to ₹1,009.53 crore with net interest income up 19.46% to ₹2,292 crore.
📈 Bajaj Finance’s net profit rose 14.03% year-on-year to ₹3,955.28 crore in the April-June quarter.
🧼 HUL’s net profit increased 2.19% year-on-year to ₹2,610 crore in the April-June quarter.
📅 Tata Consumer approved raising ₹2,997.77 crore through a rights issue from 5 August to 19 August with a record date of 27 July.
💊 Torrent Pharma’s net profit rose 1.20% to ₹423 crore in the April-June quarter.
📈 M&M Financial’s net profit surged 37% year-on-year to ₹497 crore in the April-June quarter.
📉 JSW Steel’s net profit plummeted 64% year-on-year to ₹845 crore in the first quarter with revenue up 2% to ₹42,943 crore.
♻️ Sustainability Corner
⚡ Hyundai Motor India and Charge Zone will jointly establish EV charging infrastructure.
🏗️ The Central Government proposed a joint venture between NTPC and BHEL to establish an 800 MW ultra-supercritical thermal power plant.
🌱 JSW Neo Energy secures two major contracts to expand its renewable energy portfolio.
🚀 IPO corner
Upcoming SME IPOs:
- Bulkcorp International Limited (Jul 30, 2024 – Aug 01, 2024)
- Sathlokhar Synergys E&C Global Limited (Jul 30, 2024 – Aug 01, 2024)
- Kizi Apparels Limited (Jul 30, 2024 – Aug 01, 2024)
- Akums Drugs and Pharmaceuticals Limited (Jul 30, 2024 – Aug 01, 2024)
- Ashapura Logistics Limited (Jul 30, 2024 – Aug 01, 2024)
- Rajputana Industries Limited (Jul 30, 2024 – Aug 01, 2024)
- Utssav Cz Gold Jewels Limited (Jul 31, 2024 – Aug 02, 2024)
- Akums Drugs and Pharmaceuticals (31st July – 1st August)
- Dhariwalcorp Limited (Aug 01, 2024 – Aug 05, 2024)
- Ola electric (2nd – 6th August)
News:
- Hyderabad-based Standard Glass Lining Technology plans to raise Rs 600 crore through an IPO. The company has filed its draft red herring prospectus (DRHP) with SEBI to initiate the process.
Budget 2024 – A Deep Dive into India’s Economic Blueprint
The recently unveiled Budget 2024 has set an ambitious course for India, aiming to transform the country into a developed nation. With a strong emphasis on inclusive growth and infrastructure development, the budget seeks to address the aspirations of a billion-plus population. Let’s delve deeper into the specifics and understand how it impacts various sectors.
Infrastructure: Building Blocks of Growth
The government’s commitment to infrastructure development is evident with a substantial allocation of ₹11,110 billion. This substantial investment is expected to catalyze growth in sectors such as construction, steel, and cement. Roads, railways, and airports are set to receive a major boost, enhancing connectivity and creating employment opportunities.
Agriculture: Nurturing the Rural Economy
The budget has prioritized the agricultural sector with a focus on enhancing farmers’ income. The allocation of ₹150 billion for agriculture and allied sectors, coupled with initiatives like the digital crop survey and promotion of oilseed production, reflects the government’s intent to strengthen rural India.
Manufacturing and Innovation: Driving Industrial Growth
To bolster domestic manufacturing, the budget introduced production-linked incentives and support for MSMEs. The emphasis on research and innovation, highlighted by the ₹10,000 crore venture capital fund for the space economy, positions India as a global innovation hub. Sectors like automobiles, electronics, and pharmaceuticals are poised to benefit from these initiatives.
Energy Transition: A Green Push
India’s commitment to sustainability is evident in the budget. The allocation of funds for renewable energy, particularly rooftop solar, underscores the government’s push towards a green economy. This shift is expected to create opportunities in the renewable energy sector and contribute to climate change mitigation.
Other Key Sectors: A Balanced Approach
Sectors such as railways, defense, tourism, and mining have also received budgetary support. The government’s focus on developing the tourism sector, particularly through religious tourism initiatives, aims to boost economic activity and job creation.
Tax Implications: A Balanced Approach
The budget introduced changes to the tax structure, including modifications to capital gains tax. The new tax regime offers certain benefits, but careful analysis is required to determine its impact on individual taxpayers.
| Total Income | Tax rate |
| ₹0 to ₹3,00,000 | 0% |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
The budget has also proposed a hike in securities transaction tax on futures and options trading – raised STT on sale of options from 0.0625% to 0.1% of the option premium, and on sale of futures from 0.0125% to 0.02% on the contract value.
Here’s an example to show the impact of hike in STT on futures and options.
Futures trading: If you sell one lot of Nifty futures, say, at 24,500 (Nifty’s lot size is 25), the value of the contract will be ₹6,12,500 (24,500 multiplied by 25) and the STT will be calculated on this value. Henceforth, you will have to pay ₹123 (₹6,12,500 multiplied 0.02%) as STT compared to the earlier ₹77 (₹6,12,500 multiplied by 0.0125%), a hike of 60%.
Options trading: If you sell a 25000-strike call option at a premium of ₹200. Here, the premium received will be ₹5,000 (₹200 multiplied by lot size of 25). The new STT charge will be ₹5 (₹5,000 multiplied by 0.1%) whereas earlier it was ₹3.1 (₹5,000 multiplied by 0.0625%), a hike of 60%.
The budget also proposed an increased tax on short-term capital gains. This together with higher securities transaction tax on futures and options indicates the government’s focus on curbing speculative activities in the market.
Here’s a look at the changes in capital gains structure of various securities including equity, mutual funds, physical gold and real estate:
| Product | Before | After | ||
|---|---|---|---|---|
| Short Term | Long Term | Short Term | Long Term | |
| Equity Shares & securities | 15% | 10% (>12 months) | 20% | 12.5% (>12 months) |
| Sale of bonds/debentures | Slab rate | 10% (>12 months) | Slab rate | 12.5% (>12 months) |
| REIT/InvIT | 15% | 10% (>36 months) | 20.00% | 12.5% (>12 months) |
| Physical Gold | Slab rate | Slab rate (>36 months) | Slab rate | Slab rate (>24 months) |
| Real Estate | Slab rate | 20% (>24 months) (with indexation) | Slab rate | 12.5% (>24 months) |
| Equity funds | 15.00% | 10% (>12 months) | 20.00% | 12.5% (>12 months) |
| Debt funds | Slab rate | Slab rate (>36 months) | Slab rate | Slab rate (>24 months) |
| Other funds (Gold funds, Gold ETFs, International funds, FoFs) | Slab rate | Slab rate (>36 months) | Slab rate | 12.5% (>24 months) |
Fiscal Management: A Cautious Stance
The budget aims for fiscal consolidation with a reduced fiscal deficit target of 4.5% for the next fiscal year. The government has also announced a reduction in market borrowings, which is expected to have a positive impact on interest rates.
While the budget presents a promising outlook, challenges such as inflation and global economic uncertainties need to be closely monitored. Overall, the budget will be positive for the Indian economy in the long run, esp with the government’s priority on fiscal.
🗓️Upcoming key financial events for the week:
| Date | Event |
| 30-Jul-24 | USD CB Consumer Confidence |
| USD JOLTS Job Openings | |
| EUR French Flash Services PMI | |
| 31-Jul-24 | India’s Infrastructure Output YoY (Jun) |
| EUR Core CPI Flash Estimate YoY | |
| USD Employment Cost Index QoQ | |
| USD Pending Home Sales MoM | |
| USD Federal Funds Rate | |
| 1-Aug-24 | India’s HSBC Manufacturing PMI Final (Jul) |
