The Nirmala Sitharaman Show

Tale of the Tape

Hola Amigos. Markets were volatile AF as the budget took centre stage. 🎢

Nifty and Sensex swung from one extreme to another as investors digested the budget announcements. Midcaps (-0.9%) and Smallcaps (-1.2%) ended with deep cuts. Over two stocks declined for every gainer. 👎

Most sectors ended lower. PSU Banks (-5.7%) and Metals (-4.5%) were the top losers. FMCG (+1.1%) stocks closed higher for the second day in a row. 📈

Adani Group stocks continued to bleed after Credit Suisse stopped accepting Adani Group’s bonds. Adani Enterprises crashed by -30%. Adani Ports and Ambuja Cements were locked in a 20% lower circuit. 🚨

ITC rebounded ~9% from its intraday low after a lower-than-expected increase in taxes on tobacco products. 🚬

Travel and Hospitality stocks were in high demand. Indian Hotels, EIH Ltd and Lemon Tree Hotels rallied between 6%-8% each. Check out their charts below. 🚀

Insurance stocks were beaten down badly after the GOI withdrew any tax incentives for insurance investments in the budget announcement. GIC, HDFC Life and ICICI Prudential were down 11%-12% each. 🤕

JSPL jumped +4% after a double upgrade by CLSA. The global brokerage firm sees a +15% upside from current levels. 💸

Syngene International was in focus after 4 cr shares (10% equity) changed hands in a block deal. Reports indicate that promoter Biocon is the seller. 🤝

Results reaction. Jubilant Foodworks (-4%) hit an 8-month low. Chola Finance (+6%) posted the highest single-day gain since April. 📊

Here are the closing prints:

Nifty	17,616	-0.3%
Sensex	59,708	+0.3%
Bank Nifty	40,513	-0.4%

Budget 2023: Key Takeaways

Finance Minister Nirmala Sitharaman announced a series of measures to boost the domestic economy even as global macroeconomic conditions create uncertainty. Higher tax benefits for the working class and increased capex spending to enhance growth and consumption were key positives. But, lower subsidies and no relief whatsoever for the crypto industry were major omissions. Here are the top takeaways: 💯

Income Tax: The GOI provided some much-needed relief to the taxpayers. Salaried employees with an annual income of up to Rs 7 lakh will not pay any tax UNDER THE NEW TAX REGIME. They also simplified the tax structure by reducing the tax slabs to 5 (from 6) and increasing the tax-free limit to Rs 3 lakh (vs Rs 2.5 lakh earlier). The GOI also proposed to reduce the surcharge rate from 37% to 25% in the new tax regime. 😇
Infrastructure: The GOI will spend Rs 10 lakh crore on infrastructure projects, +33% over the previous year. Of this, Rs 2.4 lakh crore will be allocated to the Indian Railways, which is an all-time high. Separately, a further Rs 79,000 cr (+66% YoY) will be provided under the Pradhan Mantri Awaaz Yojana (PMAY) for the housing sector. This is positive for a host of sectors like capital goods, engineering, cement, and metal, and creates jobs. 🏗️
Green Energy: The GOI has set aside Rs 35,000 cr to boost investments in the renewable energy sector. Additionally, they have allocated nearly Rs 20,000 cr to achieve 5 MT per annum of green hydrogen production. Custom duty on lithium-ion batteries used in electric vehicles was also reduced to 13% (vs 21% earlier). ♻️

Overall it was a solid budget but there were a few misses. The defence sector allocation at Rs 5.94 lakh cr was lower than expected, increase in the tax on tobacco products by +16% (the first hike in 4 years), and the withdrawal of tax incentives for insurance investments. You win some, you lose some. ✌️

Chartbusters

Travel and Hospitality stocks were LIT! Here’s why… 🤓

The GOI had a special focus on tourism in this year’s budget. They announced dedicated schemes like Swadesh Darshan and Dekho Apna Desh to boost the domestic travel sector. 50 tourist destinations will be identified and developed as a whole package for domestic and international tourism. 🧳

Union Finance Minister Nirmala Sitharaman said in her budget speech:

The country offers immense attraction for domestic as well as foreign tourists. There is a large potential to be tapped in tourism. The sector holds huge opportunities for jobs and entrepreneurship for youth in particular.

Indian Hotels, EIH Ltd and Lemon Tree Hotels rallied between 6%-8% each. Check out their charts below: 📈

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Earnings Highlights

Cholamandalam Investment and Finance: Net Interest Income: Rs 1,832 cr; (+22% YoY) | Net Profit: Rs 684 cr; (+31% YoY)
KPIT Technologies: Revenue: Rs 917 cr; (+47% YoY) | Net Profit: Rs 100 cr; (+43% YoY)
Indian Hotels: Revenue: Rs 1,686 cr; (+51% YoY) | Net Profit: Rs 383 cr; (+2.1X YoY)
Jubilant FoodWorks: Revenue: Rs 1,332 cr; (+10% YoY) | Net Profit: Rs 80 cr; (-40% YoY)