Markets Turn Bearish Post Budget: A Quick Look

The S&P BSE Sensex and NSE Nifty 50 after opening higher at 39,990.40 and 11,964.75 fell sharply after Finance Minister Nirmala Sitharaman presented her maiden Budget on July 5, 2019. The Sensex fell by 394.67 points as investors weighed Budget and closed at 39,513.39, whereas the broader Nifty 50 Index crashed 135.60 points and closed at 11,811.20. The selling pressure was seen broadly across various shares including power, IT, metal, auto and realty shares post the Union Budget speech. Commenting on the Budget, Amar Ambani, President & Research Head, YES Securities said, “The big surcharge tax on the high-income group and possible liquidity squeezing of secondary market liquidity due to disinvestment and increased public shareholding is causing the stock market to fall today.” 

However, experts remain positive on banking stocks post the boost given to the sector in the budget. “Markets will be range bound as there are positives for the banks, while for sectors like IT there will be challenges. Further, increase in tax rate for the super-rich could pose long-term challenges. Markets from Monday will be focused on corporate earnings, which at this juncture appear to be a mixed bag,” said Naveen Kulkarni, Head of Research, Reliance Securities.

Echoing similar thoughts, Dhiraj Relli, MD & CEO, HDFC Securities said, “Markets could gain upward momentum on clear signs of corporate earnings growth resuming and/or emerging markets coming back to favour in a big way. However, any negatives on growth resumption and/or fiscal slippages could derail this momentum.” Most market experts feel, this was a balanced budget and the markets are expected to return to their original trajectory in a couple of days.