The Union Budget for FY24 sent mixed signals to Dalal Street, with bulls finding comfort in the government’s continued focus on domestic growth and rural incentives. A key relief for investors was the decision to leave long-term capital gains tax and securities transaction tax unchanged. While the fiscal plan ticked many boxes on the market’s wishlist, it also brought some disappointments. Ten specific stocks saw significant price movements on Wednesday, reflecting the immediate impact of the Budget announcements.
Infrastructure and Banking Lead the Charge
Larsen & Toubro emerged as a clear winner, with shares rising as much as 4% to a high of Rs 2,215.95. The rally was driven by the capital outlay for FY24, which increased by more than the expected 33% to Rs 10 lakh crore.
This figure is nearly three times higher than the outlay made in the 2019-20 Budget. As the primary proxy for India’s infrastructure story, L&T benefits directly from this improved order and revenue visibility.
ICICI Bank shares climbed 3% as investors reacted positively to the government’s push to boost consumer spending. Stronger consumer activity is expected to drive credit growth, a key metric for banking stocks. The sector generally thrives when economic expansion is supported by such fiscal measures.
Tata Motors initially fell due to weak overall market conditions but reversed course after the Budget announced increased spending to scrap old government vehicles. This move provides a direct revenue boost for the automaker. The stock’s recovery highlights how specific policy tweaks can override broader market sentiment.
Reactions in Consumer and Industrial Sectors
ITC shares rebounded after an initial knee-jerk negative reaction to a hike in cigarette duties. The government increased the National Calamity Contingent Duty by 16%, which translates to a 1-3% price increase for cigarettes. Analysts noted that the impact on overall sales volumes is expected to be limited, allowing the stock to stabilize quickly.
The insurance sector saw a sharp correction. LIC and other peers fell by over 5% following a change in tax rules. For life insurance policies other than ULIPs, premiums exceeding Rs 5 lakh will now have their income taxed. This new rule applies to policies offered after April 1, altering the value proposition for high-net-worth clients.
Indian Hotels was a standout performer, rallying 9% on news that tourism promotion would be taken up in “mission mode.” The plan involves active participation from states, convergence of government programs, and public-private partnerships. This aggressive stance on the tourism sector has boosted investor confidence in hospitality stocks.
Industrial and technology names also saw movement. Dixon Technologies rose 5% after the Budget reduced the basic customs duty on parts of open cells for TV panels. BEML, however, fell sharply. The decline followed the government’s announcement of a divestment target and a specific defence outlay for FY24. The Budget estimated a divestment target of Rs 61,000 crore for the current financial year, which weighed on the stock.
Amara Raja Batteries gained ground as the government reduced the customs duty on lithium cells sharply to 13% from 21%. Additionally, subsidies on EV batteries were extended for one more year. These moves support the electric vehicle ecosystem and the battery manufacturing supply chain.
Venky’s India shares rose over 3% after the Budget raised the target for farm credit to Rs 20 lakh crore. The government also signaled a focus on animal husbandry, dairy, and fisheries. These agricultural priorities aim to bolster rural income, which is a critical component of the broader economic strategy.
