BENCHMARKS END WITH MINOR LOSSES AFTER INTERIM BUDGET; NIFTY SETTLES BELOW 21,700

The domestic equity indices wrapped up the day little changed in a volatile session following Finance Minister Nirmala Sitharaman`s presentation of the inline interim budget without major announcements. The Nifty settled below the 21,700 level after hitting the day�s high of 21,832.95 in mid-morning trade. Trading was volatile due to February F&O series expiry today, marked by the interim budget`s uneventful impact. PSU banks rallied, while media and metal shares corrected.

The barometer index, the S&P BSE Sensex, declined 106.81 points or 0.15% to 71,645.30. The Nifty 50 index lost 28.25 points or 0.13% to 21,697.45.

In the broader market, the S&P BSE Mid-Cap index declined 0.40%, and the S&P BSE Small-Cap index shed 0.22%.

The market breadth was negative. On the BSE, 1774 shares rose and 2081 shares fell. A total of 88 shares were unchanged.

The NSE`s India VIX, a gauge of market`s expectation of volatility over the near term, dropped 9.92% to 14.46.

Interim Budget 2024:

In her budget announcement, Finance Minister Nirmala Sitharaman proposed to maintain the current tax rates for both direct and indirect taxes, including export duties, emphasizing consistency in taxation. The minister also highlighted that over the last decade, tax collections have more than doubled, indicating a significant increase in revenue generation for the government.

Additionally, while presenting the federal budget for the current fiscal year, FM revised the fiscal deficit to 5.8% of gross domestic product, reflecting a slight adjustment from the previous estimate. Government data revealed that India`s fiscal deficit for the first nine months of the fiscal year through December amounted to Rs 9.82 lakh crore, which accounted for 55% of the annual estimates, emphasizing the need for careful fiscal management in the remaining period of the fiscal year.

The FY25 fiscal deficit target has been set at 5.1% of GDP, Sitharaman said. FY25 gross market borrowing pegged at Rs 14.13 lakh crore, net borrowing at Rs 11.75 lakh crore, she noted.

The Finance Minister announced a focus on encouraging states to undertake comprehensive development of iconic tourist centers and promote them on a global scale. This initiative aims to enhance the tourism sector and showcase India`s iconic destinations to a global audience, potentially boosting tourism and economic growth.

Sitharaman announced a significant surge in the capex outlook for the next year, reaching Rs 11.11 lakh crore, as well as plans for three major railway corridors: port connectivity, energy, mineral, and cement corridor, and high-traffic density corridor.

FM revealed the government`s plan to introduce a scheme aimed at assisting the middle class in rented houses, slums, chawls, or unauthorized colonies to acquire their own homes. She also highlighted the increased female enrollment in higher education and STEM courses, indicating a positive trend in female workforce participation. Additionally, the government is focused on promoting vaccination for girls aged 9-14 to prevent cervical cancer and has implemented initiatives such as making triple talaq illegal and providing housing under the PM Awas Yojana to enhance the dignity of women. Furthermore, the establishment of a corpus to provide long-term, low-interest financing is aimed at encouraging private sector research and innovation in sunrise domains.

The Finance Minister`s budget speech underscored the government`s dedication to inclusive development and growth, particularly prioritizing the needs of the marginalized segments, including the poor, farmers, youth, and women. Key initiatives highlighted in the speech aimed at empowering women included the prohibition of triple talaq, providing legislative reservation, and offering housing support through the Awas Yojana in rural areas.

Additionally, the government extended substantial support to women entrepreneurs by disbursing 34 crore loans through the Mudra Yojana. Furthermore, the minister emphasized the government`s focus on "GDP" (governance, development, and performance) ahead of the upcoming general election, highlighting India`s robust real GDP growth rate of 7.7% between April and September 2023, which is the highest among major global economies.

Economy:

The seasonally adjusted HSBC India Manufacturing Purchasing Managers� Index (PMI) recovered from an 18-month low of 54.9 in December to 56.5 in January. The latest reading highlighted the strongest improvement in the health of the sector since last September.

Meanwhile, Goods and Services Tax collections jumped 10.4% to over Rs 1.72 lakh crore in January, reflecting buoyant economic activity and setting the stage for the next phase of GST reforms. This is the second-highest monthly collection ever and marks the third month in this financial year with a collection of Rs 1.70 lakh crore or more, a finance ministry statement said on Wednesday. "The gross GST revenue collected in the month of January 2024 is Rs 1,72,129 crore, which shows a 10.4% y-o-y growth over the revenue of Rs 1,55,922 crore collected in January 2023," the ministry said.

Numbers to Track:

The yield on India`s 10-year benchmark federal paper declined 1.12% to 7.064 as compared with previous close 7.144

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 82.9775, compared with its close of 83.0450 during the previous trading session.

MCX Gold futures for 5 February 2024 settlement shed 0.28% to Rs 62,780.

The US Dollar index (DXY), which tracks the greenback`s value against a basket of currencies, was up 0.42% to 103.72.

The United States 10-year bond yield fell 0.43% to 3.947.

In the commodities market, Brent crude for April 2024 settlement rose 57 cents or 0.71% to $81.12 a barrel.

Global Markets:

European markets declined as euro zone headline inflation slightly eased in January, with annual price rises at 2.8% compared to December`s 2.9%. Core inflation also dropped to 3.3% from 3.4% in December.

In Asia, stocks closed lower, influenced by the decline on Wall Street following the US Federal Reserve`s indication of a delay in implementing interest rate cuts.

The US market tumbled overnight after the Federal Reserve decided to keep interest rates steady amid cooling inflation and a resilient economy, emphasizing its vigilance toward inflation risks amidst an uncertain economic outlook.

Stocks in Spotlight:

One 97 Communications (PayTM) hit a lower circuit of 20% after the the RBI ordered Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other prepaid instruments after February 29.

Paytm Payments Bank, an associate of One 97 Communications (OCL), said it is taking "immediate steps" to comply with the RBI`s directions.

One 97 Communications said: "OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since starting of the embargo. We now will accelerate the plans and completely move to other bank partners."

It further said: �Depending on the nature of the resolution, the company expects this action to have a worst case impact of Rs 300 to 500 crore on its annual EBITDA going forward. However, the company expects to continue on its trajectory to improve its profitability.�

Titan Company fell 1.93%. Tata Group company reported standalone net profit increased 9.35% to Rs 1,040 crore in Q3 FY24 as against Rs 951 crore reported in Q3 FY23. Revenue from operations jumped 23.63% year on year to Rs 12,912 crore in the quarter ended 31 December 2023. During the quarter, the company`s income from jewellery business surged 23% YoY to Rs 11,709 crore.

Maruti Suzuki India rallied 4.40% after its total sales increased 15.55% to 199,364 units in January 2024 as against 172,535 units recorded in January 2023.

Dixon Technologies (India) rallied 2.29% after the company reported 87% jump in consolidated net profit to Rs 970.7 crore on 100% increase in revenue from operations to Rs 4,818.25 crore in Q3FY24 over Q3 FY23.

Dabur India rallied 3.12% after the FMCG major`s consolidated net profit rose 8.04% to Rs 514.22 crore on 6.96% increase in revenue from operations to Rs 3,255.06 crore in Q3 FY24 over Q3 FY23.

Data Patterns (India) rallied 2.02% after the company�s consolidated net profit jumped 52.97% to Rs 50.97 crore in Q3 FY24 as compared with Rs 33.32 crore recorded in Q3 FY23. Revenue from operations jumped 24.77% to Rs 139.51 crore in the quarter ended 31 December 2023 as compared to Rs 111.81 crore recorded in the same period last year.

Shree Cement advanced 3.78% after the cement major reported 165% rise in net profit to Rs 734 crore on 20% rise in net revenue from operations to Rs 4901 crore in Q3 FY24 over Q3 FY23. Total sale volume increased YoY by 11% from 8.03 million tonnes to 8.89 million tonnes.

Indus Towers shed 1.35%. US private equity giant KKR and top Canadian pension fund Canada Pension Plan Investment Board ( CPPIB) have reportedly launched a $465 million block deal in Indus Towers. KKR is looking to sell its complete stake in Indus Towers, which stands at 4.85% for $323 million while CPPIB wants to sell a 2.14% stake for $142 million.

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