Markets staged a strong rebound on Monday, recouping about half of the losses from the previous session as investors assessed the implications of the Union Budget and turned to value buying in frontline stocks after the sharp correction.
The Sensex jumped 943.52 points, or 1.17%, to close at 81,666.46, while the Nifty gained 262.95 points, or 1.06%, to end at 25,088.40. Domestic equity benchmarks emerged as the top gainers in Asia on Monday. During intraday trade, the Sensex and Nifty rose as much as 1,009.31 points (1.25%) and 282.65 points (1.14%), respectively.
The NSE’s India VIX slipped 8.14% to 13.87, indicating a cooling of market volatility. In the previous session, the volatility gauge had surged to an eight-month high of 15.10.
Sharp fall in crude oil prices
A sharp fall in crude oil prices (down 7.4%) and a 47-paise appreciation of the Indian rupee against the US dollar also boosted investor sentiment.
On Sunday, both benchmark indices had fallen by up to 2% as investors turned jittery over the hike in securities transaction tax (STT) on futures and options trades announced by Finance Minister Nirmala Sitharaman in the Union Budget.
What do researchers say?
“The Budget’s policy continuity, with a clear emphasis on growth and fiscal prudence, has helped reinforce confidence in the medium- to long-term earnings outlook,” said Vinod Nair, Head of Research at Geojit Investments.
He added that the sharp decline in global crude oil prices has offered some relief, reflecting signs of easing geopolitical tensions between the US and Iran. However, in the near term, market sentiment is expected to remain cautious due to below-estimate Q3 earnings and ongoing global tensions.
“Market sentiment improved as investors digested the implications of the Budget and turned to value buying in frontline stocks after the sharp correction. However, mixed global cues and lingering policy-related uncertainties capped the upside, keeping the recovery measured rather than aggressive,” said Ajit Mishra, SVP – Research, Religare Broking.
Investor wealth rose by ₹4.42 lakh crore to ₹455.04 lakh crore, recovering nearly half of the ₹9.41 lakh crore erosion recorded during Sunday’s special session.
Foreign portfolio investors sold shares worth ₹1,832.46 crore, while domestic institutional investors bought equities worth ₹2,446.33 crore, according to provisional BSE data.
Overall market breadth was marginally negative, with 2,220 stocks declining against 2,039 advances on the BSE. Barring IT and healthcare, all sectoral indices ended in the green. Auto, oil and gas, metal, realty and FMCG stocks were the top performers, rising by up to 2.13%.
Reliance Industries was the biggest contributor to the Sensex rally, adding 253 points to the index’s 943-point gain. RIL, along with L&T, ICICI Bank, HDFC Bank and M&M, together contributed nearly two-thirds of the Sensex rise (633 points or 67%).
Power Grid, Adani Ports, BEL, RIL and M&M were the top Sensex gainers, rising by up to 7.61%, while Axis Bank, Infosys, TCS, Trent and Titan Company were the top laggards, falling by up to 2%.
In Asian markets, barring India and Malaysia, equity indices across the region ended lower on Monday. South Korea (down 5.26%), Indonesia (down 4.88%), China (down 2.48%) and Hong Kong (down 2.23%) were among the worst performers.