This Article is From Feb 01, 2020

How Markets Have Fared Since Budget 2019

Budget 2020: There is just one day left before Finance Minister Nirmala Sitharaman reveals what's in store for the markets in this year's Budget.

How Markets Have Fared Since Budget 2019

Budget 2020: Since last Union Budget, the first after Prime Minister Narendra Modi's return to power in May last year, domestic stock markets saw a series of ups and downs starting with an initial negative reaction to the news of higher tax implications for foreign investors. In the following months, a range of announcements aimed at boosting investor confidence and restoring the financial health of the country - including a hefty cut in corporate taxes - helped the markets stay positive fuelled by a rally in select heavyweights.

With just one day left before Finance Minister Nirmala Sitharaman reveals what's in store for the markets in this year's Budget, here's a summary of how the markets have fared since the July 5 Budget.

During this period, the S&P BSE Sensex index rose 2.52 per cent whereas the broader NSE Nifty benchmark climbed up 0.75 per cent so far, as of Thursday's close.

On the 50-scrip index, twenty stocks - led by Bharti Airtel (+34.27%), Asian Paints (+32.05%), Nestle (+31.46%), Bharat Petroleum (+23.24%) and ICICI Bank (+21.76%) - have clocked positive returns so far, whereas thirty have given in to losses - with GAIL (-59.89%), Yes Bank (-59.38%), HDFC Bank (-50.56%), HCL Tech (-41.59%) and ONGC (-30.88%) being the worst hit.

Top Nifty Gainers/Losers Since July 5

Bharti Airtel+34.27%
Asian Paints+32.05%
Bharat Petroleum+23.24%
ICICI Bank+21.76%
Dr Reddy's Laboratories+21.20%
Bajaj Fijance+16.76%
Tech Mahindra+13.40%
Zee Entertainment-24.87%
Coal India-25.05%
Indian Oil-25.36%
HCL Tech-41.59%
HDFC Bank-50.56%
Yes Bank-59.38%
(Source NSE data)

Out of the 11 sectoral indices on the National Stock Exchange (NSE), six have risen since the July 5 budget so far, whereas the remaining five have suffered negative returns. Of these, the Nifty Realty index has been the biggest gainer so far, having risen 11.83 per cent, followed by the financial services and fast-moving consumer goods gauges, up 3.52 per cent and 3.50 per cent respectively.

On the flipside, the Nifty PSU Bank index - comprising shares in 13 of the country's state-run lenders including State Bank of India, Bank of Baroda and Punjab National Bank - has been the worst hit, down 28.83 per cent so far. PSU banks are followed by the media and metal sector indices, down 12.29 per cent and 11.26 per cent respectively.

On the Bombay Stock Exchange (BSE), which has a total 19 sectoral indices, 12 have recorded positive returns so far, with the top percentage gainers being the S&P BSE Telecom, Realty and Healthcare gauges - up 15.15 per cent, 10.86 per cent and 9.33 per cent respectively. These are following by consumer discretionary goods, technology and energy shares, whose barometers have posted gains of 5.60 per cent, 3.52 per cent and 3.33 per cent respectively.

On the other hand, the S&P BSE Capital Goods, Metal, Power and Industrials have declined 12.18 per cent, 11.84 per cent, 9.97 per cent and 5.79 per cent respectively.

Analysts say if it weren't for the corporate tax cut announced in September last year, the markets would have failed to stay afloat already marred by a prolonged economic slowdown and dwindling business confidence.

(Also read: How Stock Markets Have Reacted To Budget Announcements In The Past)

On September 20, the government lowered the effective corporate tax on domestic firms to 25.2 per cent from 35 per cent, a measure understood to lead to better profitability especially for large corporates by many analysts.

"Since the reintroduction of long-term capital gains (LTCG) tax in 2018, the performance in the capital markets has been limited to select stocks," said AK Prabhakar, head of research at IDBI Capital.

"The corporate tax cut led to a rebound in the markets, taking the Nifty from 10,700 levels to past 12,000," he added.

It remains to be seen whether the government will announce big ticket announcements to revive the economy, which is staring at its worst annual pace of expansion recorded since 2008-2009.

Analysts say the markets are likely to remain volatile until the government presents the Budget on February 1.