How markets reacted to the Budget

The Budget came in a period when good news was otherwise scarce.

As Table 1 shows, the Sensex – already high – is up marginally. 

Table 2 suggests this is true also of small- and mid-cap indices – though public sector companies, as shown in Table 3, may be losing most of what they gained.

The Budget came in a period when good news was otherwise scarce. 

As Table 4 shows, credit growth still is slow, and not keeping up with deposit growth. Meanwhile, foreign flows into India, while solid on debt (Table 5), have been volatile on equity (Table 6).

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The sector-specific market response, diagrammed in Table 7, is illuminating.

Health care and banking have done well. But bank shares’ climb is driven by private banks; PSU Bank Index has gone negative.

Also, in spite of the finance minister’s push to infrastructure and demand, indices for infra and FMCG sectors have declined in value. As Table 8 shows, FMCG was already relatively expensive.

Here's how the Budget impacted markets