How have the markets reacted to the Union Budget? As Table 1 shows, the Sensex – already high – is up marginally. Read our full coverage on Union Budget Table 2 suggests this is true also of small- and mid-cap indices – though public sector companies, as shown in Table 3, may be losing most of what they gained. The Budget came in a period when good news was otherwise scarce. As Table 4 shows, credit growth still is slow, and not keeping up with deposit growth. Meanwhile, foreign flows into India, while solid on debt (Table 5), have been volatile on equity (Table 6). The sector-specific market response, diagrammed in Table 7, is illuminating.
Health care and banking have done well. But bank shares’ climb is driven by private banks; PSU Bank Index has gone negative. Also, in spite of the finance minister’s push to infrastructure and demand, indices for infra and FMCG sectors have declined in value. As Table 8 shows, FMCG was already relatively expensive.