People watch the interim Union Budget session 2019-20 being screened outside Bombay Stock Exchange (BSE), in Mumbai, Friday, February 1, 2019. Image Credit: PTI

Dubai: Indian stock market traders cheered the proposal of the increase the tax slab of the middle class, which boosted consumption stocks.

The Bombay Stock Exchange index rose as much as 522 points on Friday, before closing 0.59 per cent higher at 36,469.43. The Nifty 50 index closed 0.58 per cent higher at 10,893.65.

Indian finance minister Piyush Goyal presented an election friendly budget, proposing sops to farmers as well as increasing the tax bracket for middle class to Rs500,000 (Dh25,863). Analysts said the budget proposal would mean higher disposable income in the hands of consumers, which may trigger higher spending.

“Nifty settled higher in volatile trade after the government presented a farm-friendly, consumption-oriented Budget ahead of the general elections,” HDFC Securities said in a note.

Consumer-oriented stocks such as Hero Motor Corp, Maruti, Asian Paints rose 3-7 per cent at end of trade. The BSE mid-cap index was the top gainer with more than 1 per cent gains. However, sops to farmers and the middle class meant higher fiscal deficit, which the government expect it to slip by 10 basis points to 3.4 per cent for the current year. The Indian rupee weakened y 17 paise to close at 71.25 against the US dollar.

“Following the announcement of the budget, there wasn’t much movement in the stock market. The Rupee fluctuated between 71.10-71.40 considering the impacts outlined in the proposals set forth during the budget. Going ahead, the outcome of the elections will further dictate rupee movement,” Adeeb Ahamed, managing director at Lulu Financial Group said. Indian rupee was one of the worst performing Asian currency last year with 11 per cent loss.