Budget 2023: How it impacts stock market; all you need to know

Finance Minister Nirmala Sitharaman is going to announce the Union Budget 2023-24 on 1 February this year. The Union Budget impacts the whole country and its economic growth. This important document details the expenditure and revenue receipts anticipated for the upcoming fiscal year. Hence, the Budget holds a great amount of significance for every sector and every citizen of the country. People will be able to watch the live streaming of the Budget on DD News, Lok Sabha TV, Rajya Sabha TV, and other news channels. Public can also watch the Budget on the official YouTube and Twitter channels of Lok Sabha and Sansad TV. Along with the businesses and different sectors of this country, the Budget also impacts the Indian stock market. The extent of the deficit and the way of financing impacts the money supply and the rate of interest in an economy. High interest rates imply higher cost of capital for the industry, lower profits, and hence lower prices of stocks. Similarly, a hike in indirect taxes would affect the shares of companies who are engaged in manufacturing goods and services. Ridham Desai, Managing Director of Morgan Stanley India, stated that the government’s fiscal deficit target, changes to long-term capital gains tax, and spending plans can impact the stock market. Desai stated in a pre-Budget report, “The impact of the budget on the market has been on a secular decline albeit actual performance is a function of pre-budget expectations (measured by market performance ahead of the budget). Market participants still need to negotiate volatility.” According to him, Union Budget’s influence on short-term market performance is decreasing, but volatility has increased since 2019 and reached an 11-year high in 2022. So, a lot of volatility can be seen on that day. Here is how the Budget can impact stock market: A credible fiscal target, and its connected effect on macro stability, is expectedly going to be appreciated by stock markets. It will also provide the Reserve Bank of India (RBI) a greater flexibility in its exit from the up cycle in rates. Tax buoyancy allows the government to raise spending and/or consolidate fiscal policies. If the government puts its focus on consolidating the economy, the financials are likely to outperform. If it prefers spending (notably infrastructure and rural spending), industrial stocks and consumer discretionary are expected to fare better. An increase in the effective long-term capital gains tax on equities (either via tax rate or holding period) could dampen stocks, particularly those in the broad market. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.