Markets relish strong Budget, global cues

Equity markets on Tuesday soared for the second straight session after the Union Budget was presented by finance minister Nirmala Sitharaman. The Sensex rallied by 1197.11 points (2.46%) to close at 49,797.72 whereas, Nifty rallied by 366.65 points (2.57%) to close at 14,647.85. With Tuesday’s rally the Sensex is once again a whisker away from the 50,000 mark.

Equities have nearly recovered the losses that they posted in the run up to the Budget. Markets have risen by 7.5% in just the last two trading sessions. Foreign portfolio investors who had pulled out capital from Indian equities last week have once again turned buyers with the FPIs buying stocks worth $455.16 million.

Following the announcements of the Union Budget coupled with a rise in the company earnings forecast, many brokerages are in fact revising their year end targets and estimates for the benchmark indices. This is because they expect more earnings upgrades for listed companies. Rusmik Oza, executive vice president, head Fundamental Research, Kotak Securities, said, “We are revising our CY 2021 Nifty-50 target from 13,500 to 15,000 and BSE-Sensex target from 46,000 to 51,000. Post yesterday’s budget, looking at Q3FY21 numbers that are coming and the very low base of the first half of FY20 we feel there could be more earnings upgrades possible in the next few months.”

What drove the markets higher was the buying in the banking stocks. The Nifty bank rallied as much as 3.56% to close at 34,267.9 making a fresh record high. Banking stocks have witnessed strong buying as investors have taken announcements such as the creation of an ‘asset reconstruction company’ as well as the divestment of two public sector banks positively. These measures have been perceived as growth oriented by market participants.

Joseph Thomas, head of research, Emkay Wealth Management, said, “The markets kept up the momentum gained from a positive budget presented on Monday.  The rally is broad based and derived its basic premises from the growth oriented proposals in the budget across various key sectors of the economy.”

Positive global cues also supported the rally in the Indian markets.  The European markets in countries such as the United Kingdom, Germany, and France were up by 0.4% to 1.57%. Similarly, Asian markets in countries such as China, South Korea and Taiwan were up by 0.81% to 2.27%.

Global markets were rallying on progress around the US fiscal stimulus.

The biggest gainers on the Nifty were Tata Motors, Shree Cement, Ultratech Cement Company, State Bank of India, and UPL, up by 16.93%, 7.29%, 6.98%, 6.6%, and 5.74%. The biggest losers on the Nifty were HDFC Life, Bajaj Finserv, Hero Motocorp, Hindustan Unilever, and SBI Life, down by 2.52%, 2.23%, 1.5%, 1%, and 0.93%.