Push To Infra, Green Energy, Innovation

The market's reaction to the Interim Budget was expectedly neutral. However, there were some announcements that are likely to have a long-lasting effect. The government's emphasis on infrastructure spending, green energy and innovation, including inviting the private sector to participate, will boost these sectors

- Kundan Kishore

As Union Minister of Finance Nirmala Sitharaman rose to present the Interim Budget this time, the question that lingered on everybody's mind was: would it be a populist budget or fiscally prudent? She chose the middle path. "The Interim Budget emphasises strategic continuity across multiple areas, avoids short-term populist measures and displays fiscal prudence with FY25 fiscal deficit pegged at 5.1 per cent, and a modest borrowing programme which bond markets may like," says Vishal Kapoor, CEO, Bandhan Mutual Fund. 

Market Neutral The market's reaction was expectedly neutral. Historically, on Interim Budget days, the market tends not to exhibit aggressive behaviour.

Since 2014, on two occasions, the market closed on a positive note with a small gain. On February 17, 2014, the Sensex closed with a gain of 0.48 per cent, and on February 1, 2019, it gained 0.59 per cent. This time, the broadly tracked equity indices, the Nifty 50 and Sensex, experienced marginal declines after a volatile session. The Sensex fell 106.81 points (0.15 per cent) to settle at 71,645.30, and the Nifty 50 lost 28.25 points (0.13 per cent) and closed at 21,697.45 (see Historical Performance).

Notably, the Nifty PSU Bank index recorded the highest gain, surging by 3.10 per cent in response to the announcement of a modest borrowing target of ₹14.1 trillion. This decision resonated positively within the banking sector, and contributed to a notable uptick in this space.

Another index that closed in the positive territory was auto. The announcement of an over-seven-fold increase in allocation for the auto sector's production-linked incentive scheme for FY25, reaching ₹3,500 crore from the current ₹480 crore, sparked optimism.

The neutral stock market reaction signals an appreciation for the government's strategic continuity and disciplined fiscal approach.