The value of BSE-30 companies rose five per cent and that of Nifty-50 companies rose 4.7 per cent on the day of the Budget, which is an indicator that investors were evidently happy with the Budget, private think CMIE (Centre for Monitoring Indian Economy) has said in its latest article. It is unusual for the value of these companies to rise by more than 2 per cent on an average day, said the article written by CMIE CEO Mayesh Vyas.
It said the relatively smaller NiftyNext-50 companies rose nearly 3 per cent and the much broader BSE 500 shot up by 4.2 per cent on the day. Even a week after the budget, all the equity indices based on these companies were doing very well. "BSE-30 was up by 9.6 per cent, Nifty-50 was up by 9.5 per cent, NiftyNext-50 was up by 6.5 per cent, BSE-500 was up by 8.6 per cent and COSPI was up by 7.6 per cent," the article observes.
But how did Budget fare with households? The CMIE observed households expressed displeasure as a week after the budget, the Index of Consumer Sentiments fell 4.2 per cent. "Contrast this with the nearly 9 per cent increase in equity market valuations response to the budget on the bourses. Households were not very impressed with the budget," it added.
The article says the budget may or may not be the reason for household perceptions to worsen week after budget but sentiments have worsened after it. "The proportion of households that believe that the financial and business conditions would improve in the coming year declined from a very low 5.5 per cent in the week before the budget to 4.8 per cent after the budget. Those who believed that conditions would worsen increased from 44.9 per cent before the budget to 46.5 per cent after the budget," the CMIE article said, adding that expectations over five years are equally bad, if not worse.
Experts say though Budget 2021 has re-imagined both spending and borrowing and reposed faith in large-scale infrastructure building and healthcare, it'll still amount to a K-shaped response due to the sharp difference between the perception of equity market investors and households.
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