Impact of Budget 2021on an Investor

 

Feb 01: Today Finance Minister Smt. Nirmala Sitharaman unvield the Union Budget 2021. The outcome of the budget had a strong impact on the Share market.

Benchmark indices broke the continuous losing streak witnessed in the last few days and the Dalal street gave a thumbs up to the announcement made by the Finance Minister. At close Sensex was up by 5%, NIFTY by 4.7%, Bank Nifty by 8.2% Nifty Financial services by 7.6%

Banking stocks have outperformed.

The top gainer was Indusind bank 15% Icici Bank 13.3%, RBL Bank 11.3% , SBI 10.9%

Banking stocks rallied after Finance Minister Nirmala Sitharam announced the Government would infuse 20,000 crores into the Public sector bank. An organization will be set up through Asset Reconstruction Company (ARC).

ARC will take the stresses asset system at a discounted rate. It is set up to take over Bad load and illiquid holdings. All the NPA will be moved to the new organization. Balance sheet of the banks will get cleaned up.

While the Bank Nifty had a rally, there was not much cheer for the other sectors. Nifty Pharma lost -0.5% , Nifty IT gained 1.1% Nifty FMCG 1.7%. Reliance grew just by over 3%

For Startups and Innovators, the FM announced that the OPC can be incorporated without a limit for turnover or paid-up capital. This also allows NRIs to incorporate OPC in India. Our FM proposes a special framework for MSME.

FM also proposed to amend the Insurance Act to introduce additional FDI to insurance companies from the existing 49% to 74%. This benefitted players like ICICI Prudential and SBI Life.

Finally the definition of small companies changed where companies with a paid-up capital not  exceeding 2cr & a turnover not exceeding 20cr are to be considered small companies. Over 2 lakh+ companies benefit from this provision. Finally more money to Senior Citizens as anyone above the age of 75 and having pension or interest income need not file Income tax return       

 

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