Benchmarks extend winning streak for second straight session

Wednesday’s session turned out to be a fabulous day of trade for the Indian equity markets, where frontline gauges, extending their previous session’s jubilation, garnered gains of around another two percent. Sentiments got a boost with Finance Minister Arun Jaitley’s statement that India stands out as a haven of stability amid a weak economic environment globally and promised steps to sustain growth. He also said the country's macroeconomics factors are stable and the government is committed to fiscal consolidation as well as low inflation. Investors also drew some comfort from a rally in Asian shares, which touched two-month highs on Wednesday as overnight gains in oil prices and a batch of positive economic data from Australia to the United States calmed fears of a global economic slowdown. Some support also came with the report that India's GDP growth is likely to pick up to 7.8% in fiscal 2016-17 from 7.6% this year, largely driven by higher discretionary demand. Meanwhile, banking shares mainly public sector undertakings (PSUs) rallied 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. Shares of Real estate companies surged for the second straight trading sessions after the Union Budget presented by Finance Minister Arun Jaitley on Monday assigned special thrust to rural India, infrastructure, real estate and the housing sector.

On the global front, Asian markets hit a two-month high, with the Japan’s Nikkei and China's main indices both surging by over four percent on Wednesday, and European markets up for the fifth day in a row, on track for their longest winning streak in five months. Investors shrugged off further signs of weakness in global manufacturing, taking their cue from other indicators pointing to pockets of light amid the recent economic gloom such as US construction spending, and Australian and Swiss GDP.

Back home, the benchmark got off to a positive start in the morning trade as investor’s sentiment remained buoyant tracking a firm trend in the rest of Asia, following the overnight rally in the US on improved economic data. Some support also came with the Agriculture minister Radha Mohan Singh’s statement that he expects the country to achieve 4% growth in the farm sector next fiscal year, helped by the Budget boost and on early predictions of a favourable monsoon. Second half of the session saw the key gauges capitalize on the momentum further and spurt to session’s highest levels in dying hour. However, a mild profit booking in dying moments of trade ensured that the key indices shut shops off the intraday highs. Eventually the NSE’s 50-share broadly followed index Nifty, climbed by over two percent and settled over the crucial 7,300 support level, while Bombay Stock Exchange’s Sensitive Index Sensex amassed over four hundred and fifty points and closed over the psychological 24,250 mark. Moreover, the broader markets too participated in the rally and closed with gains of around two percent. On the BSE sectoral space, the Bankex counter remained the top gainer in the space with over five percent gains, followed by the Realty pocket which gained by over four and half percent. On the flipside, only the defensive FMCG index failed to keep its head above the water and dipped marginally.

The market breadth remained optimistic as there were 1970 shares on the gaining side against 693 shares on the losing side, while 131 shares remained unchanged.

Finally, the BSE Sensex surged by 463.63 points or 1.95% to 24242.98, while the CNX Nifty rose 146.55 points or 2.03% to 7,368.85. 

The BSE Sensex touched a high and a low 24280.42 and 24043.89, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 1.88%, while Small cap index gained 2.21%

The top gaining sectoral indices on the BSE were Realty up by 5.05%, Bankex up by 4.92%, PSU up by 2.57%, IT up by 2.49% and TECK up by 2.26%, while FMCG down by 0.11% were the only losing index on BSE.

The top gainers on the Sensex were SBI up by 11.50%, ICICI Bank up by 7.36%, Adani Ports &Special up by 5.96%, Hero MotoCorp up by 5.28% and BHEL up by 4.91%. On the flip side, Mahindra & Mahindra down by 5.31%, Coal India down by 1.97%, Sun Pharma down by 1.75%, ITC down by 1.60% and Bajaj Auto down by 1.17% 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 touched a high and low 7,380.35 and 7,308.15 respectively. 

The top gainers on Nifty were SBI up by 12.56%, ICICI Bank up by 7.59%, PNB up by 7.54%, Hindalco up by 7.33% and Bank of Baroda up by 6.43%. On the flip side, Mahindra & Mahindra down by 5.29%, Sun Pharma down by 1.96%, ITC down by 1.80%, Coal India down by 1.75% and BPCL down by 1.22% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 20.79 points or 0.34% to 6,173.67, France’s CAC gained 23.21 points or 0.53% to 4,430.05 and Germany’s DAX was up by 34.27 points or 0.35% to 9,751.43.

Asian markets ended higher on Wednesday, as overnight gains in oil prices and signs of improvement in the US economy helped ease investor worries about slowing global growth. Expectations of further support from major central banks in Asia and Europe also boosted risk appetite. Japanese shares surged to a more than three-week high, as the dollar rose against the yen after strong US factory and construction data, giving exporters a boost and lifting the overall market. China stocks ended higher, led by gains in realty and commodity-related shares on hopes that Beijing will unveil mores steps to boost flagging economic growth. Investors shrugged off news that rating agency Moody's cut its China outlook to Negative from Stable, as the market awaits policy cues from China's annual meeting of top legislatures that starts March 5.