Market Impact of Budget 2024

The Union Budget of India is always an awaited event. People throughout the country eagerly watch the Budget to gain insight into the future of the market and the government’s plans. The budget also has the potential to significantly affect the stock market as it covers all sectors.

The Union Budget in 2024 was focused on employment, MSMEs, skilling, and the upliftment of the middle class in India. This budget is expected to impact several industries. In this article, we will discuss the major expected impacts of the 2024 Union Budget.

• Higher capital gains taxes may deter some investors, potentially affecting overall market sentiment.
• Capital expenditure on agriculture and self-sufficiency reforms are set to expand the FMCG sector, particularly in oilseeds and natural farming.
• Real estate will benefit from an expansion of the Pradhan Mantri Awas Yojana and infrastructure development in urban areas.

Let us dive straight into analysing the major impact of the 2024 budget:

Stock market

It is expected that the 2024 budget will have a significant impact on the financial market. Most prominently, the budget stated an increase in the long-term and short-term capital gains taxes. The long-term capital gains tax has been increased to 12.5% from an earlier 10%, and the short-term capital gains tax has been raised to 20% from the earlier 15% (for equity-oriented funds).

Besides these changes, the government has also raised the Securities Transaction Tax to 0.02% from 0.01%. On the face of it, these steps could discourage savings and investments in the stock market.
 

FMCG

Another big impact of the 2024 budget may be on the FMCG sector. The industry is expected to undergo rapid expansion as it has received a capital expenditure allocation of Rs. 11.11 lakh crore. In addition to this, several other reforms are also in the works which will enhance the self-sufficiency of the sector in India, with a special focus on the production of oil seeds like sesame, sunflower, mustard, and soybean, and pulses.

The 2024 budget also had a special focus on agriculture, like natural farming, which will indirectly contribute to the FMCG sector’s growth.
 

Real estate

The 2024 budget also had announcements expanding the Pradhan Mantri Awas Yojana to construct 3 crore more homes in urban regions. This is expected to boost affordable housing in real estate, increasing the demand for labour and construction materials.

Besides this, the budget also laid out plans for the construction of infrastructure, vegetable supply chains, and industrial parks surrounding these urban areas to create further opportunities in these regions.
 

Mobile phones

The budget is also expected to influence the smartphone sector. This is because the custom duty on smartphones has been reduced from 20% to 15%. This is also applicable to smartphone accessories like chargers, adapters, and circuit board assemblies. This should empower more people to purchase imported smartphones at lower rates to boost overall sales in the market.
 

Gold

Precious metals, along with gold, should also receive a big boost as the 2024 budget reduced the customs duties on gold, along with a few other precious metals and gems. Gold and silver saw a reduction in customs duty to 6% from the earlier 15%. Similarly, silver and gold dore had customs duty reduced to 5.35% from 14.35%.

This may reduce gold bond returns as they are linked with the current gold prices.
 

Automobile

While the automobile sector did not have any direct announcements impacting it, a variety of factors are expected to influence the industry. One such measure is the reduction of customs duties on 25 minerals. This is significant because one of the minerals is lithium, a core part of EV battery manufacturing. This is expected to bring down the cost of making EVs, encouraging more people to make the switch to electric vehicles.

The 2024 Union Budget brings wide-ranging changes that will significantly impact multiple sectors of the Indian economy. Key focus areas include boosting the FMCG and real estate sectors, facilitating smartphone affordability, and altering tax regimes in the stock market. These changes aim to drive growth while addressing the needs of the middle class and fostering economic resilience.