Budget Impact on Stock Market

The benchmark indices extended on their gains and were trading nearly 5 per cent higher in the late afternoon trade on Monday following Finance Minister Nirmala Sitharaman’s Union Budget 2021 speech. Investors across the Indian stock market reacted to the proposals of the Union Budget 2021 which were presented by the finance minister in the Parliament today. She announced a flurry of schemes across the healthcare, auto and infrastructure and agriculture sectors in her speech.

Investors will keenly watch how Union finance minister Nirmala Sitharaman balances the need to spend big to spur a budding economic recovery amid limited fiscal room as she rises to present the Union budget today. Sitharaman also said the government would infuse ₹20,000 crore into public sector banks (PSBs) in 2021-22, to meet the regulatory norms. She also announced that the government will set up a company to manage bad debt for banks, which is expected to reach record levels this year. The firm will hold problem loans for banks, which can then be sold on to investors at a reduced price, according to the plan outlined by the finance minister in her budget speech on Monday. According to Reserve Bank of India’s Financial Stability Report published last month, the non-performing assets will rise to 13.5 per cent of total advances by the end of September from 7.5 per cent a year ago.