Bulls take charge! What lies ahead for Indian stock market post Budget 2022?

The benchmark indices ended higher today as market participants reacted positively to the announcements made by Finance Minister Nirmala Sitharaman in Union Budget 2022.
 
Sensex and Nifty ended the day in the green post-Finance Minister Nirmala Sitharaman's fourth consecutive Budget speech today. Sensex ended 848 points higher at 58,862 and Nifty rose 237 points to 17,576.
 
In 2021, the 30-share Sensex took a big leap on Budget Day and jumped over 2,000 points to end 5 per cent higher. Sensex witnessed a sharp fall of around 1,000 points or 2.43 per cent and closed right below 40K when the Budget was presented in 2020. In 2019, when Sitharman presented her first Union Budget, the index had closed a mere 0.59 per cent higher.

 
The Budget announcements made by the FM today will now set the tone of the stock market. According to market analysts, the share market is expected to remain volatile in this eventful week.
 
Sonam Srivastava, Founder at Wright Research said that the Budget seems to meet market expectations and nothing unexpected was announced. The markets kept their opening buoyancy during the FM speech but seem to be losing steam post the announcement led by a decline in Banking stocks - which did not receive a lot of mention in the speech.
 
She added that the markets might receive the focus on infrastructure spending and prudence in terms of Fiscal spending positively in light of the need for growth and the fears of Fed rate hikes. In addition, the welfare schemes for urban and rural poor were also urgently needed to boost consumption, and the market will not receive these poorly.
 
"Sectors in the limelight will be infrastructure, logistics, cement, real estate. agriculture, digital & fintech players, sustainability, EVs," Srivastava said.
 
"The Budget is very long in its intent to provide a growth base for the next 25 years. Thankfully, the measures announced are consistent with that. Most importantly there are no negative surprises. The FM has made a commendable effort in allocating resources for long-term development and making the small tweaks that are required to increase business velocity. Overall, the budget is consumer and market-friendly," Abhay Agarwal, Founder, and Fund Manager, Piper Serica told BusinessToday.in.
 
Talking about specific stocks and sectors, he said that there are some clear winners from the Budget. The big infrastructure push will require large-scale project financing. This will benefit large banks like HDFC Bank, SBI, ICICI, etc. that have the balance sheet and expertise to finance large projects. Capital goods, infrastructure, and cement companies will also benefit like Ultratech, L&T, ABB, Thermax, etc.
 
"With a strong focus on housing, large and small housing finance companies like HDFC, Canfin, etc. should see an uptick in business. There is clear support for to use of technology for providing education and healthcare services. So large tech-based incumbent players like Apollo Hospital and Info Edge should see faster adaption. Biofuel companies have also benefitted from the imposition of extra Rs.2 excise on unblended fuel. This is positive for companies like Globus and Praj," he said.
 
"We believe that small banks will benefit from the extension of the ELCGS scheme since they cover the MSME lending space. The PLI applicants especially in the electronics space like Dixon and Amber are quite obvious beneficiaries. Overall, a positive budget for the entire corporate sector," Agarwal said.
 
He noted that investors should look for investing in companies that are replacing imports and at the same time using tech effectively to become cost-competitive. It is also a good time to acquire stocks of emerging consumer tech companies since the government is keen to support the use of tech in finance, education, and healthcare. Overall, retail investors should stay focused on growth investing rather than blocking their money in turnaround stories.
 
On the technical front, Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd said that although it was not the big bang price action similar to budget day last year, today’s session concluded with decent gains over a percent well above the 17500 mark. Considering the 350 – 400 points intraday range, it was almost a non–event for markets.
 
"But no negative is also considered a positive and hence, we managed to close at a comfortable position almost near day’s high. If global peers support, we will not be surprised to see an extension of today’s rally in the coming session. As far as levels are concerned, 17,700 – 17,800 are the levels to watch out for and on the flipside, 17,400 followed by 17,250 now becomes key supports," he added.
 
"At present, the Index has support at 17,240 levels while resistance comes at 17,650 levels, crossing above the same can show 17,800-18,000 levels. On the other hand, Bank nifty has support at 37,600 levels while resistance at 39,000 levels," said Palak Kothari, Research Associate, Choice Broking.