Benchmarks continue firm trade in late morning session

Indian equity benchmarks continued to trade firm in late morning session on continued capital inflows and increased buying by retail investors ahead of Budget 2015-16 slated to be announced later in the day. This is probably the first time in many years that the Union Budget is being presented on a Saturday. The stock markets are generally closed on Saturdays and Sundays, except for special circumstances. Finance minister Arun Jaitley’s first full-year budget is expected to provide a concrete blueprint towards economic development, while sticking to fiscal consolidation, and many say it could be a make-or-break case for the government. If this Budget meets expectations, it would also help prolong a market rally that has made the BSE Sensex the best-performing emerging index in the world. However, markets could see a selloff if the pro-growth measures in the Budget fall short of expectations. Meanwhile, traders got some support with reports that the foreign portfolio investors (FPIs) bought shares worth a net Rs 1,957 crore on February 27, 2015. Besides, in the Economic Survey yesterday the government has made a strong case for further monetary easing by RBI, saying that inflation will continue to decline even though the central bank remains cautious also supported the upside.

On global front, major US share indices ended lower on Friday after economic growth was slower than expected during the fourth quarter. However, the European markets completed the Friday’s session on higher note ahead of the announcement of the European Central Bank's quantitative easing program. Back home, barring IT and Teck, all other BSE sectoral indices were trading significantly in the green. Among them, realty index was the star-performer and was up 2.88 percent, followed by Capital Goods 2.75 percent and Power 2.66 percent, while IT down by 0.21% and TECK down by 0.18%.

The market breadth on BSE was positive, out of 2276 stocks traded, 1393 stocks advanced, while 791 stocks declined on the BSE. 

The BSE Sensex is currently trading at 29427.68, up by 207.56 points or 0.71% after trading in a range of 29379.42 and 29497.50. There were 24 stocks advancing against 6 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.53%, while Small cap index up by 0.69%.

The gaining sectoral indices on the BSE were Realty up by 2.16%, Capital Goods up by 1.64%, Power up by 1.13%, Bankex up by 1.07%, Metal up by 0.79% while, IT down by 0.09%, TECK down by 0.06%, Auto down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.63%, BHEL up by 1.90%, ICICI Bank up by 1.87%, HDFC up by 1.77% and Larsen & Toubro up by 1.73%. On the flip side, Hero MotoCorp down by 0.56%, Cipla down by 0.48%, Coal India down by 0.30%, Wipro down by 0.22% and Maruti Suzuki down by 0.14% were the top losers.

Meanwhile, Finance Minister Arun Jaitley will be presenting the first full budget of the new government. It’s going to be a high fiscal exercise of the government in view of the promised economic reforms and putting India on a long-term high-growth rate. The budget is also expected to have some good news for the middle class. There is general expectation that FM will announce measures to increase spending power of the middle class by offering tax breaks and would announce measures to make India an investment-friendly nation.

Arun Jaitley while presenting his maiden budget in 2014 had outlined his approach to providing relief to individual tax payers, so the Budget is likely to either raise tax slabs or hike investment limit in saving instruments. With the government focusing on core sector, Jaitley may come out with tax saving infrastructure bonds and greater tax relief for payment of interest and principal on housing loan.

Industries will be expecting, if no reduction than status quo on corporate tax, also the postponement of the implementation of the General Anti Avoidance Rules (GAAR) and guidance for Goods and Services Tax (GST), which has been announced to come into force from April 2016. Inverted duty structure too is likely to be addressed.

The government has been making efforts to encourage domestic defence manufacturers and there are likely to be big announcements to facilitate defence manufacturing under the aegis of the 'Make In India' programme. Investment in infrastructure that could revive the capex cycle will also be in focus.The CNX Nifty is currently trading at 8900.80, up by 56.20 points or 0.64% after trading in a range of 8887.90 and 8919.95. There were 40 stocks advancing against 10 stocks declining on the index.

The top gainers on Nifty were Bank of Baroda up by 3.15%, Tata Steel up by 2.78%, BHEL up by 2.09%, PNB up by 1.90% and GAIL India up by 1.89%. On the flip side, HCL Tech down by 1.14%, BPCL down by 0.71%, Hero MotoCorp down by 0.67%, Lupin down by 0.66% and Cipla down by 0.49% were the top losers.