Sensex logs best gain in 6 weeks after Economic Survey boosts Budget hopes

Ahead of Modi government’s first full Budget, the benchmark Sensex today logged its best daily gain in almost six weeks, spurting 473 points to regain 29000 level after Economic Survey made a strong pitch for big-bang reforms while projecting faster growth and improved fiscal situation.   (Read Full Report: Economic Survey)

The NSE Nifty index also sprinted by 161 points to close above the 8,800 mark, a day after Railway Budget disappointed participants due to lack of big announcements while the proposed hike in freight rates hit sentiments.

The Economic Survey 2014-15, tabled in Parliament today, called for big-bang reforms, raising public investments to drive growth and improving business environment. It forecast economy will grow by 8.1-8.5 per cent in 2015-16 and by 8-10 per cent in coming years. It stressed on the need for accelerated fiscal consolidation.

The BSE Sensex resumed higher at 28,865.12 and shot up further to 29,254.02 before ending at 29,220.12, showing a sharp gain of 473.47 points or 1.65 per cent. This is its best daily gain since January 20, 2015.

Similarly, the CNX 50-share Nifty rose by 160.75 ponts or 1.85 per cent, to finish at 8,844.60 after hitting 8,856.95.

“Investing community was clearly encouraged by the Survey which pointed out that current macroeconomic scenario in India is more favourable than others. India has reached a sweet spot and there is scope for big-bang reforms now…this raises the expectations from Budget tomorrow,” said Anand Rathi Financial Services, Sr. VP and Head – Equity Advisory, Devang Mehta.

Buying was across-the-board. Major gainers that supported the key indices to regain key levels include Tata Power, L&T, ICICI Bank, Hindalco, CIL, M&M, NTPC, ONGC and SBI.

Anticipating huge volatility during the special stock market trading on Budget day tomorrow, regulator Sebi and stock exchanges have enhanced vigil to keep manipulators at bay and ensure smooth operations.

According to provisional figures, foreigners bought shares worth Rs 2,312.15 crore yesterday. Domestic institutions too were net buyers to the tune of Rs 340.79 crore.

Globally, Asian indices closed mixed while European benchmarks were trading lower.

Veracity Broking Services, Head of Research, Jignesh Chaudhary said: “Indian stocks rose on hopes the government would deliver a budget that increases public investment and will enhance the idea of ‘Make in India’ which will boost the various sectors like manufacturing and infrastructure.”

In Asia, benchmark indices in Hong Kong, South Korea and Singapore ended lower by 0.32 per cent to 0.37 per cent while indices in Japan and China closed higher by 0.06 per cent to 0.36 per cent.

European markets were trading lower in their afternoon trade as key indices in France, Germany and the UK moved down by 0.08 per cent to 0.09 per cent.

Turning back to the local market, 26 scrips out of the 30-share Sensex pack ended higher.

Major gainers include Tata Power (5.43 per cent), L&T (4.67 per cent), ICICI Bank (4.25 per cent), Sesa Sterlite (4.20 per cent), Hindalco (3.67 per cent), SBI (3.59 per cent), NTPC (3.46 per cent) and Coal India (2.93 per cent).

Maruti Suzuki (2.75 per cent), Tata Motors (2.73 per cent), Axis Bank (2.66 per cent), BHEL (2.38 per cent) and Reliance Industries (1.59 percent) also notched up smart rise.

Among laggards, Gail India fell by 1.07 per cent

Among the S&P BSE sectoral indices, Realty 4.25 per cent, followed by Capital Goods 3.80 per cent, Power by 3.17 per cent, Metal 3.02 per cent, Bankex 2.73 per cent, Consumer Durable 2.23 per cent, Auto 2.16 per cent, Oil&Gas 1.36 per cent and Healthcare 1.17 per cent.

Small-cap and Mid-cap indices also rose by 1.04 per cent and 1.84 per cent respectively on fresh buying by retail investors.

The total market breadth turned better as 1,820 stocks ended in green, 1,059 finished in red while 123 ruled steady. The total turnover fell to Rs 4,357.07 crore from Rs 4,867.74 crore yesterday.

The BSE Sensex had witnessed drop on the Budget days in the past three years (2012, 2013 and 2014). Last year, the Sensex had closed 0.28 per cent lower at 25,372.75, while the Nifty had ended 0.23 percent down at 7,567.75. In 2013, the BSE Sensex fell 290.87 points to end at 18,861.54. Similarly, in 2012, the Sensex had fallen by 210 points to end at 17,466.

However, in 2011, the BSE Sensex had ended up 0.69 per cent at 17,823.40 points after rising as much as 3.4 per cent after the Budget was unveiled. The BSE Sensex rose as much as 2.6 percent after the budget before paring gains, in 2010.

Deven Choksey, managing director, KR Choksey Securities.

I think markets are quite confident about the budget. I think the budget will underline the various initiatives that the government has taken and going to take, which will cheer up the economy.

Devang Mehta, Sr. VP & Head – Equity Advisory, Anand Rathi Financial Services.
After having seen a pragmatic & a transformational railway budget which laid down a vision for modernization/up gradation of overall rail infrastructure & enhancement of customer experience, which was beyond the announcement of new trains, the investing community was clearly encouraged by the Economic Survey which pointed out that the current macroeconomic scenario in India is more favorable than in other economies. India has reached a sweet spot and that there is a scope for Big Bang reforms now. It also opens up space for the Reserve Bank of India to cut interest rates. Coupled with the forecast of a normal monsoon, this is likely to boost growth in the coming financial year. This also raises the expectations from the Union Budget due to be presented tomorrow.