Union Budget 2021 Highlights, FMCG Market Growth in 2020, and Buzzing Stocks Today

Tue, 2 Feb Pre-Open

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Share markets in India broke the six-day losing streak yesterday and gave complete thumbs up to the measures announced in the Union Budget 2021 by the Finance Minister to speed up growth.

The Budget announcements for healthcare, auto, and infra gave a fillip to the stock markets and benchmark indices surged over 4.5%, while the Bank Nifty hit its record high level yesterday.

The stock market was also relieved as the government avoided any extra cess or increase in Securities Transaction Tax.

Absence of the much-feared COVID-19 cess and the surcharges on Income Tax also boosted stock market sentiment.

At the closing bell yesterday, the BSE Sensex stood higher by 2,314 points (up 5%).

Meanwhile, the NSE Nifty ended up by 646 points (up 4.7%).

IndusInd Bank and ICICI Bank were among the top gainers.

UPL, on the other hand, was among the top losers.

The BSE Mid cap index and the BSE Small cap index ended higher by 3% and 2%, respectively.

On the sectoral front, banking stocks, finance stocks and realty stocks witnessed huge buying interest. The banking sector ended higher by 8.3% yesterday.

Gold prices for the latest contract on MCX were trading down by 1.7% at Rs 48,245 per 10 grams at the time of closing stock market hours yesterday.

Finance Minister Nirmala Sitharaman proposed to cut duty on gold and silver to 7.5% from 12.5%, meeting industry demand. This led to a sharp drop in gold futures prices that fell by nearly Rs 1,800 from day's high to below Rs 48,000.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Speaking of the Union Budget 2021 and stock markets, which stocks and commodities should you trade in this bullish environment?

India's #1 trader, Vijay Bhambwani answers this question in his recent video for Fast Profits Daily.

Tune in here to find out more:

Union Budget 2021 Highlights and Stock Market Implications

Here are some important highlights of Union Budget 2021:

Finance Minister Nirmala Sitharaman said the government had two main objectives when making the Budget:

• Spend big on infrastructure.
• Attend to the need of the health sector.

PM Narendra Modi said that the Budget focuses on increasing farmers' income and several measures have been taken in this direction. Farmers will be able to get loans easily. Provisions have been made to strengthen APMC markets with the help of Agriculture Infrastructure Fund

New agri infra cess to be applicable from February 2, 2021.

• Agri cess of Rs 2.5/litre on petrol & Rs 4/litre on diesel.
• Agri infra cess of 2.5% on gold, silver, & dore bars.
• Agri infra cess of 100% on alcoholic beverages.
• Agri infra cess of 17.5% on crude palm oil.

The Budget left personal income tax rates unchanged. Some announcements from the personal income tax space included:

• There is a change in double taxation on non-residential Indians (NRIs), especially those who return to India. Relief is also being looked at for those who face difficulty in getting credit for taxes paid in India.
• There is massive relief extended to a section of senior citizens. For those aged 75 or more, and who only have pension and interest income, filing their income tax returns will not be required.
• Affordable housing got a boost as the benefits available to those who avail deduction for buying an affordable home will now be extended to those who take a housing loan until March 31, 2022.
• Several tax-paying citizens who lost their jobs last year due to Covid-19 and had to take up freelancing assignments will get some relief from Budget 2021. Social Security Benefits will be extended to gig and platform workers. E-commerce workers will now be brought under Employees' State Insurance Scheme (ESI), Employees' Provident Fund (EPF) and the minimum wage rule. Women will be allowed to work in all categories in night shifts too.

The government raised the limit for Foreign Direct Investment (FDI) in the insurance sector to 74% from 49% - with safeguards. FM Sitharaman also that that the government intends to amend the Insurance Act, 1938 and will launch a new investor charter for investor protection. It will launch a securities market code which will include the Government Securities Act and the Depositories Act.

An asset reconstruction and management company will be set up for stressed assets. In FY22, PSU bank recapitalisation plan is of Rs 200 billion. The government will allow sale of distressed assets to Alternate Investment Funds (AIFs). The NCLT framework will also be strengthened to implement e-courts. All divestments announced so far, are to be completed in FY22.

It also proposes to divest two PSU banks and one general insurance company in FY22. Further, divestments of BPCL, Container Corporation, Pawan Hans, and Air India will be completed in FY22. FY22 divestment target is at Rs 1,750 billion.

Finance Minister Nirmala Sitharaman also said that Life Insurance Corporation of India (LIC) will go for an initial public offering in 2021-22. The much-awaited LIC IPO is likely to be the largest share sale.

With the optimism seen in stock markets on the back of budget announcements, the question on your mind must be - Is it Time to Plan for Sensex 100,000?

Tanushree Banerjee answers this question in yesterday's edition of the Profit Hunter. Here's what she wrote...

• So, the time to prepare for Sensex 100,000 is here, as long as you set your expectations right. The ride won't be smooth.
  
  And the gains may no longer be concentrated in Sensex stocks.
  
  Yes, you read that right.
  
  Today, the markets may cheer Budget day gains in Sensex stocks.
  
  But the underdogs, according to me, are the stocks beyond the Sensex.
  
  Sound, solid, well managed businesses with tons of free cash could attract more investor interest in the days to come.
  
  Sectors that have been side lined for years could be back in the spotlight.
  
  Promising startups may fuel of the growth of companies that acquire them.
  
  And the real Budget gains could be in the most underrated stocks over the years to come.
  
  So, sit back and enjoy the gains.
  
  But remember, act only when the time and valuations are right.

Top Stocks in Focus Today

PVR and Inox Leisure will be among the top buzzing stocks today.

Cinema halls across the country will be permitted to operate at full capacity from February 1 with adherence to COVID-19 safety protocols, Union Minister for Information and Broadcasting (I&B) Prakash Javadekar announced on Sunday.

According to the new guidelines, no film shall be allowed to screen in containment zones and states and union territories may consider "proposing additional measures" as per their assessment.

If any person visiting cinema hall is found Covid-19 positive the entire premise will have to be disinfected.

PVR share price will also be in focus today as India's largest multiplex chain operator has launched a qualified institutional placement (QIP) offering last week, aiming to raise as much as Rs 8 billion by selling shares to institutional investors.

PVR has set a floor price of Rs 1,495.93 per share for this fundraise.

IndusInd Bank Q3FY21 Results: 37% YoY Growth in Net Profit

Private sector lender IndusInd Bank reported a 37% year-on-year (YoY) decline in its December quarter net profit at Rs 8.3 billion on provisions for sour loans and a negligible loan growth.

For the quarter under review, its core net interest income (NII) grew by 11% YoY to Rs 34.1 billion on the back of loan book being stable and a marginal narrowing of the net interest margin (NIM) to 4.12%. The other income came down 8% YoY to Rs 16.4 billion, which resulted in an only 4% increase in the overall income to Rs 50.2 billion.

Even as the income generation faced setbacks, it saw an additional pile-up of potentially sour assets for which it had to set aside money as provisions which in turn ate into the profits. The bank said the gross non-performing assets ratio would have come at 2.9% if not for the Supreme Court standstill order on not recognizing NPAs, as against 2.2% in the year-ago period and 2.2% in September.

The overall provisions rose to Rs 18.5 billion that included Rs 11 billion of Covid-19 related provisions, as against Rs 10 billion in the year ago period.

The bank decided to provide 100% of the requirements for unsecured assets, while in the secured ones, it was lower. Over Rs 5.4 billion of advances on credit cards or nearly 10% of the overall portfolio were slippages, and much of the cards where slippages have been observed are old customers.

The bank expects a capital infusion of over Rs 20 billion from the promoter by February 18 and will not need additional infusion for at least six more months. Any capital will be needed for loan growth purposes or if any inorganic growth opportunity crops up.

India's FMCG Market Expands 4.2% in 2020

Moving on to news from the FMCG sector...

India's fast-moving consumer goods (FMCG) market expanded 4.2% in the last calendar year, twice the rate in 2019 despite manufacturing and distribution hurdles in late March and April, helped by the rise in the packaged food and hygiene segments as many Indians stayed home due to Covid.

The market for daily groceries and household products had grown 2.1% by volume in 2019, according to the latest study by global consumer research firm Kantar Worldpanel (formerly IMRB).

Except for beverages, which declined 3.8%, all other segments including personal care, household and foods witnessed significantly higher growth during the year.

Colgate global chairman Noel Wallace said he was pleased with the growth rebound that the oral care giant saw in India during the second half of 2020. "Generating 7% organic in the third quarter and just shy of 10% organic in the fourth, we think is a terrific performance," Wallace said on an earnings call.

During the December quarter, most FMCG companies posted high volume growth. Dabur and Marico posted 18% and 15% expansion, respectively while HUL volume growth was at 4%.

This rose in successive quarters was due to the gradual reopening of the economy as restrictions were progressively eased.

We will keep you updated on the latest developments from this space. Stay tuned.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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