Investors became richer by over Rs 6.34 lakh crore on Monday as markets gave a big shout-out to the Budget 2021-22, which analysts termed as 'unprecedented' against the backdrop of the pandemic-induced slowdown.
Cheering the Budget proposals, the BSE benchmark Sensex zoomed 2,314.84 points or 5 per cent to close at 48,600.61.
During the day, it jumped 2,478.63 points to 48,764.40. This was the best Budget-day gain for the markets since 1997, analysts said.
Following the extremely positive market sentiment, the market capitalisation of BSE-listed companies rallied Rs 6,34,069.67 crore to Rs 1,92,46,713.70 crore.
Finance Minister Nirmala Sitharaman on Monday proposed more than doubling of healthcare spending while imposing a new agri cess on certain imported goods and raising customs duty on items ranging from cotton to electronics in a bid to pull the economy out of the trough.
In her Budget for the fiscal year beginning April 1, she restricted tax-free interest on retirement fund to Rs 2.5 lakh annually but gave tax exemption on Leave Travel Concession subject to incurring of specified expenditure.
Foreign direct investment (FDI) limit in insurance was proposed to be raised to 74 per cent from the current 49 per cent. She also allocated Rs 20,000 crore to recapitalise state-run banks that are saddled with bad loans and have been a drag on growth.
"The FM presented an unprecedented Budget against the backdrop of a pandemic induced economic slowdown. The Budget was very progressive in proposing a sharp uptick in government expenditure to boost economic growth.
"For FY22 capital expenditure is pegged at Rs 5.54 lakh crore -- a growth of 26 per cent YoY with strong impetus on infrastructure spending including roads, rail, ports and airports. Some of the key measures proposed are raising FDI in insurance sector, PSU bank recapitalisation plan of Rs 20,000 crore. FY22 Disinvestment target has been set at Rs 1.75 lakh crore," said Ajay Menon, MD and CEO, Motilal Oswal Financial Services (Broking & Distribution).
Another major positive factor has been no introduction of new COVID-19 related tax in the Budget, he added.
"On the back of these measures, the equity market has given a positive reaction. Nifty gained 4.7 per cent, while Sensex was up 5 per cent -- both the indices posted their best Budget-day gain since 1997, when they had gained over 6 per cent each," Menon added.
IndusInd Bank was the biggest gainer among the 30 Sensex companies, rallying 14.75 per cent, followed by ICICI Bank, Bajaj Finserv, SBI, Larsen & Toubro and HDFC.
On the other hand, Dr Reddy's, Tech Mahindra and Hindustan Unilever Limited were the laggards.
"What appealed most to the stock market was the absence of moves like wealth tax or increase in LTCG on equity investments," said Amar Ambani, Senior President & Institutional Research Head at Yes Securities.
In the broader market, the BSE midcap and smallcap index gained up to 3 per cent.
"This is surely an expansionary Budget with a vision to spur capex, infrastructure and healthcare spending. The way forward for divestments, privatisation and asset monetisation looks promising. Going with a sharp correction into the Budget, the street was enthused by the absence of negatives and an attempt to be focused on robust growth for key sectors and in turn boost economic growth.
"The market cheer was also led by an underlying pessimism on raising tax rates or taxing the super rich, which was prevailing in the market in the last couple of weeks, which did not materialise and was a pleasant surprise," said Devang Mehta, Head Equity Advisory, Centrum Broking.
All the BSE sectoral indices closed with gains, with bankex leading the chart, jumping 8.33 per cent, followed by finance (7.49 per cent) and realty (6.65 per cent).
At the BSE, 1,942 companies advanced, while 991 declined and 196 remained unchanged.
"Markets heaved a sigh of relief in absence of any major change in personal or corporate taxes and therefore reacted positively. Though the exuberance might be temporary but this Budget is truly a right fit in times of a pandemic," added Jimeet Modi, Founder & CEO, Samco Group.