Impact on Stock Market
The Union budget 2021 has been a bold one, where the government has increased its expenses without increasing the tax rates. Till now, the investors have welcomed the budget with open arms and it may continue to have a strong positive impact on the equity markets for FY ’21-’22 due to increase in liquidity, especially for some sectors including Infrastructure and affiliated sectors, Railways, Financial, and Capital Goods. Auto and Pharma sectors can boost from the scrappage policy introduced in the budget, and Consumer Goods (Electronic) sector can gain from the higher customs duty levied on imports. In short term, the equity markets might witness a correction, but for the year, the budget looks to be fruitful for equities, and in turn, for the country’s economy as well.
Impact on Commodity Market
In the Union Budget 2021, the FM has not announced any changes in the commodities transaction tax. However, there has been some changes in the custom duty on some commodities, which might affect the commodity market. Base customs duty on gold and silver has been reduced from 12.5% to 7.5%, but they will attract agriculture Infrastructure and development cess so the net rate levied comes around 10.75%. The budget has no impact on crude oil. As for iron and steel, Customs duty has been reduced to 7.5% from 10% earlier on semis, flat, and long products of non-alloy, alloy, and stainless steels.
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