Boisterous benchmarks stage a remarkable rally; surge over 3%

Indian equity indices showcased a stunning performance and went on to outclass indices around the world by vivaciously rallying over three percentage points in the session and settling above the psychological 7,200 (Nifty) and 23,700 (Sensex) levels. Investors continued to build hefty positions across the board as sentiments got a boost after Finance Minister Arun Jaitley retained FY17 fiscal deficit target at 3.5 per cent of GDP despite increasing expenditure for rural and infrastructure spending.  Finance Minister has also assured that the development agenda will not be compromised and a committee will be set up to review the working of fiscal responsibility and Budget management.  Appreciation in Indian rupee too supported the sentiments. Hardening further for the third straight day, Indian rupee rose 38 paise to 68.04 against the dollar on sustained selling of the US currency by banks and exporters.  Also, Index heavyweight ITC made its presence felt by bouncing back and surging over ten percent in the session after the government hiked the excise duty on cigarettes by 10%.

Some support also came with the report that the growth in the eight core sectors jumped to a three-month high of 2.9 per cent in January due to sharp pick-up in coal, cement and electricity generation. Furthermore, manufacturing business conditions in India continued to improve, with new orders, exports, output and purchasing activity all rising in February. At 51.1 in February, unchanged from January's reading, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI), pointed to a second consecutive monthly improvement in business conditions across the sector. Meanwhile, the uptick in global markets also buoyed the sentiment after China's central bank further cut the reserve requirement ratio by 0.5% in an attempt to calm investor nerves. Japanese shares closed higher after declining as much as 1.1 percent earlier in the day amid the yen's strength and disappointing capital spending, household spending and corporate profits data. Moreover, European shares extended the previous session's gains on Tuesday, with London Stock Exchange leading the market higher after Intercontinental Exchange confirmed a possible counterbid for the British operator.

Earlier the start of the markets was good and the marketmen seemed to have analyzed the impact of the budget on different sectors and remained on buying spree from the very beginning. Initially it remained selective buying but as the trade progressed it turned broad based and there was no looking back for the markets till the last breath with benchmarks closing near their high points of the day. It was a day of bulls that helped market to post biggest single-day gain since May 18, 2009. The NSE’s 50-share broadly followed index Nifty, got buttressed by over three percent to settle above the crucial 7,200 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over seven hundred points and closed above the psychological 23,700 mark. Moreover, the broader markets too participated in the rally and closed with gains of over three percent. On the BSE sectoral space, hefty buying was evident across the board as not even a single sectoral index went home in the negative territory. Investors piled up hefty positions in the FMCG counter which rocketed by around five percent, while the Consumer Durables, Realty and Auto pockets too gained from strength to strength and climbed by over four percent each. The market breadth remained optimistic as there were 2011 shares on the gaining side against 589 shares on the losing side while 118 shares remained unchanged.

Finally, the BSE Sensex surged by 777.35 points or 3.38% to 23779.35, while the CNX Nifty rose 235.25 points or 3.37% to 7,222.30. 

The BSE Sensex touched a high and a low 23821.49 and 23133.18, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 3.04%, while Small cap index gained 3.23%

The top gaining sectoral indices on the BSE were FMCG up by 4.90%, Consumer Durables up by 4.37%, Realty up by 4.21%, Auto up by 4.19% and IT up by 3.72%, while there were no losers on sectoral space.

The top gainers on the Sensex were ITC up by 9.91%, ICICI Bank up by 7.95%, Maruti Suzuki up by 7.80%, Hero MotoCorp up by 6.07% and Adani Ports &Special up by 5.30%. On the flip side, ONGC down by 1.34%, Hindustan Unilever down by 0.58% and Dr. Reddys Lab down by 0.12% were the top losers.

Meanwhile, India’s manufacturing sector growth expanded for a second consecutive month in February at a stable pace driven by new orders, exports, output and purchasing activity all rising in the month. However, a faster expansion in new business inflows failed to lift growth of output. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) held steady at 51.1 in February, same as January’s reading after it fell below that level in December for the first time in over two years. A figure above 50 represents expansion while a reading below this level means contraction.

According to the survey, new orders expanded at their fastest pace in five months in February, with the sub-index rising to 52.3 from 51.7. Foreign demand also rose, though at a slower pace. On the price front, input prices climbed for the fifth month running in February but at the weakest pace in that time, while factory gate prices fell for the first time since September. Employment contracted slightly in February, after hovering just above the 50-mark in the previous four months.

The survey further highlighted that the manufacturers raised their production volumes in February, but, the rate of expansion eased from the preceding month. While underlying demand continued to improve and new business from abroad also rose, February saw a loss of growth momentum. For the first time in five months in February firms lowered their selling prices, underpinned by a softer increase in input costs and as part of efforts to secure new work.

In the month of February, goods producers continue to benefit from lower crude oil prices in global markets, which put a brake on inflationary pressures. In light of these numbers, the RBI has scope to loosen monetary policy to spur the economy.

The CNX Nifty touched a high and low 7,235.50 and 7,035.10 respectively. 

The top gainers on Nifty were ITC up by 10.38%, Maruti Suzuki up by 8.10%, ICICI Bank up by 8.05%, Vedanta up by 6.80% and Hero MotoCorp up by 6.21%. On the flip side, ONGC down by 1.13%, Hindustan Unilever down by 0.61% and Dr. Reddys Lab down by 0.38% were the top losers.

European markets were trading in green; France’s CAC increased 10.66 points or 0.24% to 4,364.21, UK’s FTSE 100 gained 21.2 points or 0.35% to 6,118.29 and Germany’s DAX was up by 111 points or 1.17% to 9,606.40.

Asian markets ended higher on Tuesday as oil prices extended overnight gains and China's central bank set the yuan fixing stronger for the first time in six days. China stocks closed up after the central bank's surprise monetary policy easing, shrugging off disappointing manufacturing and service sector surveys that highlighted the wider challenges faced by the world's second-largest economy. Late on Monday, the People's Bank of China announced a cut in the amount of cash that banks must hold as reserves - the reserve ratio requirement (RRR) - by 50 basis points. It frees up an estimated $100 billion in cash for fresh lending. Chinese government data showed activity in large factories contracted for the seventh straight month in February. The official manufacturing Purchasing Managers' Index (PMI) stood at 49.0, down from 49.4 in January. China's official services PMI fell to 52.7 in February, from 53.5 in January. Japanese shares closed higher after declining as much as 1.1 percent earlier in the day amid the yen's strength and disappointing capital spending, household spending and corporate profits data.