As per the provisional closing data, the S&P BSE Sensex, jumped 2314.84 points or 5% to 48,600.88. The Nifty 50 index surged 646.60 points or 4.74% to 14,281.50.
Shares rallied as the Union Budget offered huge stimulus to infrastructure, capex, healthcare and boosted the credit flow by taking out the toxic assets of the banking system and supported growth on an overall basis.
In broader market, the S&P BSE Mid-Cap index was up 3% while the S&P BSE Small-Cap index was up 2.03%.
Buyers outpaced sellers. On the BSE, 1946 shares rose and 980 shares fell. A total of 203 shares were unchanged.
Union Budget 2021:
Presenting the first ever digital Union Budget, Union Minister of Finance and Corporate Affairs Nirmala Sitharaman stated that India's fight against COVID-19 continues into 2021. Provision has been made of Rs 35,000 crore for COVID-19 vaccine in Budget Estimate (BE) 2021-22.
The government has committed nearly 1.97 lakh crore, over five years starting financial year 2021-22. Capital expenditure is steeply increased to provide 5.54 lakh crore which is 34.5% more than the budget estimate of 2020-21. Over and above this expenditure, more than 2 lakh crore is to be provided to states and autonomous bodies for their capital expenditure.
The fiscal deficit in Revised Estimate (RE) 2020-21 is pegged at 9.5% of GDP. It has been funded through government borrowings, multilateral borrowings, small saving funds and short term borrowings. Another Rs 80,000 crore would be needed for which the government would be approaching the markets in these 2 months, FM added.
The fiscal deficit in BE 2021-2022 is estimated to be 6.8% of GDP. The gross borrowing from the market for the next year would be around Rs 12 lakh crore.
The government aims at making use of disinvestment proceeds to finance various social sector and developmental programs and also to infuse private capital, technology and best management practices in central government public sector enterprises.
A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam among others are proposed to be completed in FY 2021-22, FM informed the house. She also added that other than IDBI Bank, a proposal of privatization of two public sector banks and one general insurance company will be taken up in the year 2021-22. The IPO of LIC would also be brought in through requisite amendments in the session itself.
Mega Investment Textiles Parks (MITRA) will be launched in addition to the Production Linked Incentive scheme to create world class infrastructure in exports. Seven Textile Parks to be established over 3 years.
A professionally managed Development Financial Institution will be set up to provide, enable and to act as catalyst for infrastructure financing. A sum of Rs 20,000 crore will be provided to capitalise this institution. A National Monetization Pipeline of potential brownfield infrastructure assets will be launched to provide visibility to investors.
Finance Minister announced that more than 13,000 km length of roads, at a cost of Rs 3.3 lakh crore, has already been awarded under the Rs 5.35 lakh crore Bharatmala Pariyojana project of which 3,800 kms have been constructed. FM provided an enhanced outlay of Rs 1,18,101 lakh crore for Ministry of Road Transport and Highways, of which Rs 1,08,230 crore is for capital, the highest ever.
The budget proposed an outlay of Rs 2,23,846 crore for health and wellbeing in BE 2021-22 as against Rs 94,452 crore in BE 2020-21, an increase of 137%.
FM proposed a voluntary vehicle scrapping policy to phase out old and unfit vehicles. Fitness tests in automated fitness centres after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles.
FM proposed Rs 1.97 lakh crore in next 5 years for Production Linked Incentive scheme (PLI) schemes in 13 sectors. This will help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology.
Sitharaman announced that the government will amend the Insurance Act, 1938 to increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards.
In order to consolidate the financial capacity of Public Sectors Banks, the government has proposed further recapitalization of Rs 20,000 crore during the fiscal 2021-22.
FM announced that the government will consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationaliszed single Securities Markets Code. The Government will support the development of a world class Fin-Tech hub at the GIFT-IFSC.
Union Budget 2021-22 proposes to create a permanent institutional framework. The proposed body would purchase investment grade debt securities both in stressed and normal times and help in the development of the bond market. The Finance Minister proposed to introduce an investor charter as a right of all financial investors across all financial products.
The government plans to slap agricultural cess on petrol at Rs 2.5 per litre and on diesel at Rs 4 per litre. "Consequent to imposition of Agriculture Infrastructure and Development Cess (AIDC) on petrol and diesel, the Basic excise duty (BED) and Special Additional Excise Duty (SAED) rates have been reduced on them so that overall consumer does not bear any additional burden. Consequently, unbranded petrol and diesel will attract basic excise duty of Rs 1.4, and Rs 1.8 per litre respectively. The SAED on unbranded petrol and diesel shall be Rs 11 and Rs 8 per litre respectively," the FM said in the Budget speech.
January Auto Sales:
Eicher Motors rose 3.30% to Rs 2835.45 after the VE Commercial Vehicles total sales volume improved by 2.3% to 5,673 units in January 2021 from 5544 units in January 2020. Sequentially, the total sales have risen by 15.9% from 4,892 units sold in December 2020. VE Commercial Vehicles (VECV) is an unlisted subsidiary of Eicher Motors. While VECV's domestic sales increased by 1.9% to 4,964 units, exports jumped 7.4% to 555 units in January 2021 over January 2020.
TVS Motor Company added 3.52% to Rs 379.90 after the company's total auto sales grew by 31% registering 307,149 units in January 2021 as against 234,920 units in the month of January 2020. While the company's total two-wheelers sales grew by 34% to 294,596 units, total three-wheeler sales declined by 13% to 12,553 units in January 2021 over January 2020. Total exports jumped by 43% to 100,926 units in January 2021 from 70,784 units in January 2020. This was despite scarcity in availability of containers.
Ashok Leyland rose 1.81% to Rs 112.65 after the commercial vehicles maker's total sales jumped 11% to 13,126 units in January 2021 from 11,850 units sold in January 2020. Sequentially, the company's total auto sales advanced 2.85% last month from 12,762 units sold in December 2020. Ashok Leyland's domestic sales stood at 12,359 units in January 2021 as against 10,850 units in January 2020, registering a 14% increase year-on-year (Y-o-Y).
Maruti Suzuki India added 0.84% to Rs 7268.35 after the auto major's total sales rose 4.3% to 160,752 units in January 2021 from 154,123 units in January 2020. Sequentially, however, the company's auto sales have remained flat in January 2021 as against 1,60,226 units sold in December 2020.
Escorts rose 5.17%. Total tractor sales surged 48.8% to 9,021 units in January 2021 as against 6,063 units in January 2020. Sequentially, the tractor sales rose 16.65% to 9,021 units in January 2021 as compared to 7,733 units in December 2020. Domestic tractor sales jumped 45.6% to 8,510 units in January 2021 over 5,845 units in January 2020. The tractor market continues to be strong on back of positive macro-economic factors and strong rural cash flows. The supply side situation is normalizing and is no longer expected to be a bottleneck to meet demand. However, rising inflation continues to be a worry.
Global Markets:
European markets were trading higher on Monday. While Asian markets closed higher on Monday as official data released over the weekend showed manufacturing activity in China growing at a slower pace in January.
China's official manufacturing Purchasing Managers' Index came in at 51.3 in January, according to a statement by the country's National Bureau of Statistics on Sunday. In comparison, the reading for December was 51.9, remaining above the 50-level which indicates growth.
U.S. stock indexes fell sharply on Friday after COVID-19 vaccine data from Johnson & Johnson hurt sentiment, while a standoff between Wall Street hedge funds and small, retail investors weighed.
Meanwhile, new trial results from Johnson & Johnson's coronavirus vaccine disappointed some investors because it was less effective on some variants, also hurting market sentiment.
J&J said its one-dose vaccine demonstrated 66% effectiveness overall in protecting against Covid-19. The vaccine was 72% effective in the United States, 66% in Latin America and 57% in South Africa after four weeks, the company said. The vaccine, however, offered complete protection against Covid-related hospitalizations.
Worries of a short squeeze grew after an army of retail investors returned to trade shares in GameStop Corp and Koss Corp. The stocks sky-rocketed after brokers including Robinhood eased some of the restrictions they had placed on trading. The U.S. Securities and Exchange Commission warned both brokerages and social media traders that it was closely monitoring potential wrongdoing.
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