Markets extend previous session rally with a gap up opening

With a gap-up opening Indian equity markets have extended their previous session’s rally and are now trading with gains of over one percent in morning deals, tracking an across the globe rally after data showed the US construction spending rose to the highest level since October 2007 and manufacturing activity gathered pace in January for the second month in a row. Strong buying interest was seen in PSU banking shares, which also supported sentiments. State Bank of India (SBI), Bank of Baroda (BOB), Bank of India (BOI), Indian Bank, Union Bank of India, Canara Bank and Punjab National Bank were trading higher after the Reserve Bank of India (RBI) allowed banks to beef up their capital adequacy by including certain items such as property value, foreign exchange for calculation of Tier-I capital.  Besides, appreciation in Indian rupee against dollar too supported the markets. The rupee rose 11 paise to 67.74 against the US dollar in early trade on Wednesday tracking a firm trend in most Asian currency markets. At present, Sensex and Nifty were trading above the crucial 24,100 and 7,300 levels respectively. Apart from blue chips, broader indices too equally participated in the rally with both mid cap and small cap indices trading up by 1.43% and 1.64% respectively.

On the global front, the US markets ended higher on Tuesday as a bevy of strong economic data helped reduce persisting fears of a potential recession. Asian markets were trading mostly in green tracking the positive lead overnight from Wall Street and European markets. Upbeat US economic data and the gain in crude oil prices have eased worries about a global economic slowdown and boosted risk appetite.

Back home, all the sectoral indices on the BSE, barring Consumer Durables, were trading in file fettle led by Bankex, PSU, Realty, Capital Goods and Oil & Gas.  The market breadth on BSE was positive in the ratio of 1381: 189 while 53 scrips remained unchanged.

The BSE Sensex is currently trading at 24105.19, up by 325.84 points or 1.37% after trading in a range of 24043.89 and 24210.62. There were 23 stocks advancing against 7 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.43%, while Small cap index up by 1.64%.

The top gaining sectoral indices on the BSE were Bankex up by 3.50%, PSU up by 2.45%, Realty up by 2.31%, Capital Goods up by 1.58% and Oil & Gas up by 1.47%, while Consumer Durables down by 0.12% was the only losing indices on BSE.

The top gainers on the Sensex were SBI up by 8.88%, Hero MotoCorp up by 4.61%, BHEL up by 4.15%, ICICI Bank up by 4.05% and Adani Ports &Special up by 3.83%. On the flip side, Mahindra & Mahindra down by 1.93%, Coal India down by 0.66%, TCS down by 0.62%, Wipro down by 0.45% and ITC down by 0.35% were the top losers.

Meanwhile, delving deeper into budget details, Revenue Secretary Hashmukh Adhia has said that the Budget has attempted to make domestic industry competitive, fuel demand and create jobs. He added that new cesses and duty hikes may have made cars and garments costlier but Finance Minister Arun Jaitley’s focus in the Budget 2016-17 was job creation and making taxation simpler, not resource mobilization.

Adhia further said that the budget has targeted a realistic 11 percent increase in tax revenue in 2016-17 and the duty changes in customs and excise are aimed at positively impacting the domestic competitiveness of our local industry. He added that taxing new manufacturing companies at 25 percent instead of 30 percent slab is aimed at boosting manufacturing. 'They will not have to wait for 5 years exemption phase out.' By increasing the limit of composite taxation scheme for small traders from Rs 1 crore to Rs 2 crore, the government has attempted to free them from tax compliance.

The Revenue Secretary said that we want to kick start the economy. First focus is only of growth and employment. Stating that cesses are for specific purposes, he said a lot of spending has been earmarked for farm and rural sector. 'So the Kisan Kalyan cess.' Infrastructure cess was borne out of pollution and traffic congestion in cities and so the levy on cars and SUVs.

He said that the Budget provides relief to small tax payers in the form of higher rebates and a simpler tax procedure for professionals. Individuals in small income bracket of up to Rs 5 lakh have been given relief by increasing the rebate on income tax to Rs 5,000 from current Rs 2,000. If we increase the tax bracket, higher level people benefit more and government losses a lot in giving benefit to higher income people. Instead of that we wanted to give limited benefit but to a deserving category.

The CNX Nifty is currently trading at 7317.35, up by 95.05 points or 1.32% after trading in a range of 7308.15 and 7351.40. There were 43 stocks advancing against 7 stocks declining on the index.

The top gainers on Nifty were Bank Of Baroda up by 9.08%, SBI up by 8.67%, PNB up by 6.25%, ICICI Bank up by 4.03% and Hero MotoCorp up by 3.91%. On the flip side, Mahindra & Mahindra down by 1.96%, Coal India down by 0.79%, TCS down by 0.65%, Wipro down by 0.36% and Asian Paints down by 0.15% were the top losers.

Asian markets were trading in green, FTSE Bursa Malaysia KLCI increased 12.41 points or 0.74% to 1,683.23, KOSPI Index increased 29.61 points or 1.54% to 1,946.27, Jakarta Composite increased 46.98 points or 0.98% to 4,826.97, Shanghai Composite increased 61.42 points or 2.25% to 2,794.59, Taiwan Weighted increased 79.08 points or 0.93% to 8,564.77, Hang Seng increased 530.48 points or 2.73% to 19,937.94 and Nikkei 225 increased 649.3 points or 4.04% to 16,734.8.1