India Budget Boosts Consumption: Stocks Surge

New Delhi, Feb 1 (PTI) Many stocks from consumption-based sectors attracted significant buying interest after Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts for the middle class and unveiled a blueprint for next-generation reforms as she looked to shore up a slowing economy amid global uncertainties.

Shares of Blue Star jumped 13.17 per cent, Crompton Greaves rallied 7.73 per cent, Havells India (5.74 per cent), Voltas (5.11 per cent), Aditya Birla Fashion and Retail (3.38 per cent), Whirlpool (3.30 per cent) and Titan (1.81 per cent) on the BSE.

The BSE consumer durables index jumped 2.47 per cent to 59,283.06.

"While the Budget failed to cheer the markets, sectoral stocks from consumer durables, FMCG, and automobile space attracted significant buying interest after the government announced major income tax relief for the salaried class. With salaried income up to Rs 12 lakh per annum exempted from any tax, consumption is expected to get a major boost which is reflected positively across most of the consumption-related sectors," Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd, said.

From the auto space, shares of Maruti surged 4.98 per cent, TVS Motor (4.08 per cent), Eicher Motors (3.69 per cent), Bajaj Auto (3.36 per cent) and Mahindra & Mahindra (2.96 per cent).

The BSE auto index climbed 1.75 per cent to 52,428.15.

"Nifty FMCG and consumer durable indices gained sharply after the Finance Minister announced significant income tax relief in the budget as a measure to boost consumption," Siddhartha Khemka, Head - Research, Wealth Management at Motilal Oswal Financial Services Ltd, said.

Individuals earning up to Rs 12.75 lakh in a year will not have to pay any taxes after she raised the exemption threshold from Rs 7 lakh. She also altered tax slabs for people earning above this threshold to help save up to Rs 1.1 lakh in taxes for those with income up to Rs 25 lakh in a year.

The tax cuts, which will cost the exchequer about Rs 1 lakh crore, will benefit 6.3 crore people, or more than 80 per cent of taxpayers, who earn up to Rs 12 lakh a year.

"The new structure will substantially reduce taxes on the middle class and leave more money in their hands, boosting household consumption, savings and investment," Sitharaman said presenting what was dubbed as a 'reformist' budget for the next fiscal in Lok Sabha.

Vijayaraghavan Swaminathan, Executive Director - Equity Research at Avendus Spark Institutional Equities, said, "The government's intent is clear with their priorities tilted towards consumption going by the big relief on tax rebates changes. Household balance sheets should get a breather due to this relief."

Shares of Godfrey Phillips India zoomed 9.81 per cent, Radico Khaitan soared 9.36 per cent, Emami (6.37 per cent), Godrej Consumer Products (6.12 per cent) and United Spirits (5.32 per cent).

The BSE FMCG index surged 2.91 per cent to 21,152.76.

In a day market with heavy volatility, the 30-share BSE benchmark Sensex eked out a marginal gain of 5.39 points or 0.01 per cent to settle at 77,505.96. The NSE Nifty dipped 26.25 points or 0.11 per cent to settle at 23,482.15.