Indian Markets React to Union Budget: Marginal Decline Amid Volatility

Indian benchmark indices opened in negative as the Union Budget failed to impress market participants. Sensex dropped by 0.11% and Nifty 40 by 0.14%. Despite volatility, domestic investors showed resilience. Global markets also faced downturns, influenced by tech earnings from Alphabet and Tesla.

India's benchmark indices opened negatively as the Union Budget failed to ignite market enthusiasm. The Sensex began the day at 80,343.38, down by 85.43 points or 0.11%, while the Nifty 40 started at 24,445.00, losing 34 points or 0.14%. The Bank Nifty exhibited a similar trend, opening at 51,657.70, down by 120.60 points or 0.23%. Sectoral stocks including Banks, Auto, Financial Services, IT, Pharma, Private Banks, Realty, and Healthcare were trading in red during early hours.

In stark contrast, sectoral stocks from FMCG, Media, Metal, PSU Bank, Consumer Durables, and Oil & Gas also showed downtrends. Significant volatility was observed in the market following the announcements of the Union Budget 2024. Although domestic indices closed marginally lower on the previous day, stocks from consumer durables, FMCG, and pharma sectors saw buying interest following incentives proposed by the Finance Minister. The push for employment, skilling, and infrastructure investments influenced market movements.

"Overall, the budget has been a non-event, as Indian markets fell and then recovered throughout the day. Domestic Institutional Investors (DIIs) bought robustly, while Foreign Institutional Investors (FIIs) sold off large amounts on Budget Day," stated Ajay Bagga, a market expert. DIIs hold Rs 125,000 crore in cash, which will be gradually allocated, supporting the market with liquidity amidst potential global risks.

Overseas investors turned net sellers in the Indian market for the first time in a week, offloading stocks worth Rs 2,975.3 crore on budget day. On the other hand, domestic investors were net buyers, purchasing stocks worth Rs 1,418 crore, according to National Stock Exchange (NSE) data. "The Nifty 50 formed a small negative candle with a long lower shadow, resembling a bullish hammer pattern, indicating a potential rebound despite recent volatility. The index has maintained its position above the 10-day and 20-day EMAs for several weeks, demonstrating resilience," said Varun Aggarwal, MD at Profit Idea.

Asian markets mirrored the downturn seen on Wall Street, with Japan's Nikkei 225 and South Korea's Kospi both trading lower on Wednesday. Futures for Hong Kong's Hang Seng index pointed to a flat opening. In the US, major indices closed slightly lower on Tuesday following earnings reports from Alphabet and Tesla. The Dow Jones declined by 57.35 points or 0.14% to 40,358.09, the S&P 500 dropped 8.67 points or 0.16% to 5,555.74, and the Nasdaq Composite edged down by 10.22 points or 0.06% to 17,997.35. Tesla shares fell 2% in regular trading and an additional 8% in after-hours trading, while Alphabet saw a modest rise of 0.1%.

(With inputs from agencies.)