Markets ended higher, amid a volatile trading session, after the Finance Minister Arun Jaitley unveiled a growth oriented Budget and made an effort to strike the right balance with focus on infrastructure growth and also reduce the fiscal deficit to 3% in three years.
The 30-share Sensex ended 141 points higher at 29,361 and the 50-share Nifty surged 57 points to close at 8,902.
Meanwhile, foreign institutional investors were net buyers in equities to the tune of Rs 1,957 crore on Friday, as per provisional stock exchange data.Read our full coverage on Union Budget
The finance minister proposed to cut corporate tax from 30% to 25% over four years and deferred the implementation of general anti-avoidance rules (GAAR) by two years.
The government estimated GDP growth for 2014-15 at 7.4% and expects 8-8.5% for 2015-16. The finance minister said that goods and service tax and cash transfers will be key focus areas.
Asserting that India's infrastructure is a mismatch with its growth ambitions, Finance Minister Arun Jaitley today proposed a sizeable Rs 70,000 crore increase in investment in the sector besides a slew of steps to spur its growth.
In line with the government’s thrust on ‘Make in India,’ the Union Budget made some key changes to address the duty anomalies that made importing of goods cheaper than manufacturing them locally. The proposal announced will give 11.5 per cent duty advantage to mobile phone, if manufactured in India and 10.5 per cent to tablets.
Arun Jaitley said the proposed Goods and Services Tax (GST) Bill will be implemented from April next year. GST is expected to bring higher revenue for government and many benefits to corporates.
Distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments is removed and is replaced with composite caps.
"The Union Budget for fiscal 2016 is the Finance Minister’s GIFT to the nation. There is a clear and sharp focus on the four key areas of Growth, Inclusion, Fiscal Prudence and Tax Rationalisation. The budget promotes Growth through its focus on infrastructure and ease of doing business. The theme of Inclusion is reflected in the measures taken to empower all stakeholders – there is greater devolution of resources to States and there are a number of measures for the poor, youth and senior citizens. The Fiscal target of 3.0% by fiscal 2018 articulated by the Finance Minister is prudent while at the same time balances the current growth needs of the economy. The clarity given on the Tax regime will go a long way in making India an attractive destination for investments, and encouraging domestic savings. The budget reflects the vision of the Government and takes India forward on a path of growth and inclusive prosperity," said Chanda Kochhar, MD & CEO, ICICI Bank
"A very good budget overall , well balanced. A lot has been done for the rural economy and to create enhanced rural employability through Skill India initiative. The budget has also provided 'clear communication' to investors for next 4 years - a) GAAR has been postponed by 2 years, b) fund managers could relocate to india without attracting permanent establishment related tax, c) clarity in subsidy structure, d) creation of special economic zone in gujrat, e) incentive for REITS, f) monetising of gold assets to convert unproductive assets to productive. Another commendable point is the extreme focus on black money and the stringent laws attached. This should discourage people from having any sort of unaccounted income. The recognition that we need to move towards a cashless society and encourage more debit and credit card transactions is also a step in the right direction. Though the fiscal deficit target has been put at 3.9 percent instead of 3.6 percent, the money is spent at the right places like infrastructure, skill development, creating ease of business and employment opportunities. So overall very positive and balanced budget." said Priyanka Khurana Goyal, Vice President,Nomura Financial Advisory and Securities Pvt Ltd
On the sectoral front, BSE Bankex emrged as the top gainer up over 3% followed by Healthcare, Auto, IT and Oil & Gas indices up between 0.5-3%. However, BSE FMCG index was the top looser down over 4% followed by Power, Consumer Durables and Realty indices ended lower up to 3%.
Finance Minister Arun Jaitley's proposal to simplify the procedures for local companies to attract foreign investments is likely to favour select private sector lenders who will now be able to raise additional money from foreign institutional investors (FIIs). Axis Bank, HDFC Bank, ICICI Bank and SBI ended higher up to 8.4%.
Pharma stocks gained across the bourses. Cipla was up 2%, Dr Reddys Lab gained 2.4%% and Sun Pharma jumped 4% after the government allocated Rs 33,152 crore to the health sector, Finance Minister Arun Jaitley said in his budget speech.
ITC ended lower by 8.3% after the Finance Minister proposed a 25% increase in 65 mm cigarettes and 15% in other categories, which is more than what the market had anticipated.
Finance Minister Arun Jaitley today proposed a sizeable Rs 70,000 crore increase in investment in infrastructure sector besides a slew of steps to spur its growth. L&T gained up to 1% while BHEL slipped 3%.
The government allocated Rs 22,407 crore for taking measures in housing and urban development across the country in 2015-16. Housing finance major, HDFC dropped 0.5%.
The Ultra Mega Power Plants (UMPP) of 4,000 mw each which recently saw private players pulling out of the bidding is likely to witness renewed interest. The finance minister Arun Jaitley in the union budget 2015 announced five more UMPPs with an expected investment of Rs 1 lakh crore. NTPC and Tata Power dipped up to 1%.
In the Union Budget, for the second time in a row the cess on coal was doubled to Rs 200 per tonne. In his maiden budget in July 2014, Arun Jaitley increased it to Rs 100 per tonne from Rs 50 per tonne. The cess is collected as National Clean Energy Fund and is disbursed for renewable energy based initiatives and power projects. Coal India ended 0.4% lower.
Arun Jaitley said the proposed Goods and Services Tax (GST) Bill will be implemented from April next year. GST is expected to bring higher revenue for government and many benefits to corporate. HUL was up 3%.
Footwear shares such as Bata India, Liberty Shoes, NB Footwear surged 5-6% on the back of reduction in excise duty to 6%.
The broader markets underperformed the large counterparts. BSE Midcap ended flat with a negative bias while BSE Smallcap index ended 0.5% lower.
Market breadth ended weak on the BSE with 1,496 declines against 1,232 advances.