MUMBAI: Benchmark equity indices soared over 5 per cent each as investors were relieved that Finance Minister Nirmala Sitharaman did not raise taxes in the Union Budget for 2021-22, and instead, chose to pump-prime the economy through higher capital expenditure and cleaning up of the banking sector books.
“This is not a populist Budget, there is no major attempt to redistribute incomes by increasing taxes on high income groups, as was the case earlier,” said Prabhat Awasthi, managing director and country head India, Nomura.
The Nifty 50 index ended 4.7 per cent or 646.6 points higher at 14,281.0, while the BSE Sensex closed at 48,600.61 points, up 5 per cent or 2,314.8 points.
In the broader market, the Nifty Midcap 100 and Nifty Smallcap 100 indices also showed strength, ending 3.3 per cent and 2.0 per cent higher, respectively.
Here are the major movers in today’s session:
Banks soar on the government’s clean-up drive
The Nifty Bank index was the biggest winner of the day, as it soared 8.3 per cent after the finance minister announced the formation of an asset management and reconstruction company to clean up the sector’s balance sheets, while the pro-cyclical colour of the Budget also raised hopes of strong credit growth.
Infrastructure stocks rally
Shares of infrastructure-related stocks from the road, cement, capital goods and ancillary sectors saw sharp gains during the session, as the finance minister announced a better-than-expected outlay on capital expenditure for the next fiscal year. The Nifty Infrastructure index ended 5 per cent higher.
IDBI Bank soars on privatisation hopes
Shares of IDBI Bank surged over 11 per cent on the finance minister’s announcement of privatisation of two state-owned banks. Investors were of the perception that the lender was the obvious candidate to be privatised.
ITC sees relief rally
Shares of ITC surged nearly 7 per cent as lack of announcements by the finance minister on cigarette taxes and the new cigarette policy brought relief to investors. The gains were largely driven by traders who had taken short positions in the stock prior to the Budget, covering their positions.
Insurance stocks rose on hike in FDI
Shares of ICICI Prudential Life Insurance, HDFC Life Insurance, SBI Life Insurance and others rose after the finance minister said the foreign direct investment limit in the sector will be raised to 74 per cent from 49 per cent with management control.
What gave a buy signal?
As many as 31 stocks on the National Stock Exchange gave buy signals based on MACD indicators, including ICICI Bank, NALCO, Container Corporation of India and Colgate Palmolive India.
What’s ahead for the market?
Traders aggressively bought the Nifty call options of 14,800 and 15,000 strike prices, expiring on Thursday, suggesting that they expect today’s rally to continue in the coming sessions.
“We expect this budget rally to extend further however participants should be selective in their approach now. Going ahead, global cues and corporate earnings would also be on the radar. The way the banking index moved on the budget day, we feel it could lead the next leg of the rally alongside infra counters,” said Ajit Mishra, vice president of research at Religare Broking.