Budget hope lifts indices; Sensex rises 814 pts, Nifty ends above 17,300

Favourable global cues, too, help benchmarks gain 1.4%; overseas investors remain sellers

A combination of favourable global cues and hope around the FY23 Budget helped the benchmark indices recover part of the massive losses they posted over the past two weeks.

The BSE Sensex rose over 1,000 points, or 1.85 per cent, during intraday trade but sustained selling by overseas investors weighed on stock prices. The 30-share index ended the session at 58,014, following a gain of 814 points or 1.4 per cent. The NSE Nifty50, on the other hand, closed the day’s trade at 17,340, up 238 points or 1.4 per cent.

Barring three, all the Sensex components ended in the green but technology and banking stocks and Reliance Industries led the rally.

Investors hope that the Union Budget on Tuesday will have measures to boost capital expenditure and revive consumption. The Economic Survey, which was released during market hours, was cautiously optimistic. The survey said India’s gross domestic product (GDP) will grow 8-8.5 per cent in FY23.

The survey noted the vaccination drive had covered the bulk of the adult population, and economic momentum was building up. Further, the supply-side reforms in the pipeline would have long-term benefits. It mentioned that growth projections are based on the assumption there won't be other debilitating effects of Covid, and that oil prices remain benign.

“There are expectations that there will be measures to boost investments and consumption through incentives to agriculture, small industries, and infrastructure. A bit of short-covering also helped. The expectation of GDP growth is reasonable. There is nothing to suggest that the economy won’t revive unless Covid plays havoc again,” said U R Bhat, co-founder, Alphaniti Fintech.

Overseas investors sold shares worth Rs 3,624 crore; domestic institutions net-bought nearly the same amount. According to experts, global cues now hold more sway over the Indian market. “It is difficult to fight global market cues unless the Budget is game-changing like last time. We can't ignore global factors altogether. Even if the Budget is good, the markets may go down but the correction may be less sharp than peers’,” said Andrew Holland, CEO, Avendus Capital Alternate Strategies

A relief rally globally aided the gains on Monday. The European and Asian markets rose, tracking gains in the US market last Friday.

Analysts predicted that monetary policy decisions by the European Central Bank and the Bank of England would help shape the market mood in the days ahead, besides the Union Budget. Investors will also be keenly tracking further evidence on economic recovery globally and locally.

Mitul Shah, head of research, Reliance Securities, said the economic survey's advance estimates of real GDP expansion of 9.2 per cent in FY22 is encouraging, despite the ongoing Covid disruptions. “This implies that overall economic activity has recovered past the pre-pandemic levels. Almost all indicators show that the economic impact of the ‘second wave’ in Q1 was much smaller than that experienced during the full lockdown phase in FY21, even though the health impact was more severe.”

The market breadth was positive with 1,831 stocks advancing, and 1,711 declining. As many as 419 stocks were locked in the upper circuit, and 198 stocks had their 52-week high. All the sectoral indices on the BSE, barring one gained. IT and consumer durable stocks gained, and their indices rose 2.7 and 2.5 per cent, respectively. Among Sensex stocks, Infosys contributed the most to the gains and rose 3.05 per cent.