Post Session: Quick Review

Tuesday’s trading session turned out to be extremely sanguine for local equity markets, which going from strength to strength, concluded near day’s highest points, on the back of slide in global crude oil prices and positive global cues.  Domestic stock markets started session on a strong note, as traders took encouragement with Minister of State for Finance Anurag Thakur’s statement that the economy is not in recession and India recorded the highest average growth among the G-20 nations during 2014-19. The minister also mentioned about continuous measures being taken by the government to improve the overall investment climate and boost the economic growth. The mood remained upbeat as Niti Aayog CEO Amitabh Kant termed the Union Budget pragmatic and said the government is determined to bring Indian economy back to a high trajectory growth path. He further said if the government will be able to achieve disinvestment target of 2020-21 then the Budget will be very successful.

Key indices continued their rally mood to reach at fresh intraday high points in last leg of trade, taking support from Finance Minister Nirmala Sitharaman’s statement that the money raised through disinvestment will be used to develop infrastructure, which will have multiplier effect on the economy and not bridging revenue deficit. Besides, Reserve Bank of India Governor Shaktikanta Das headed six-member rate setting panel started its three-day brainstorming meeting in the backdrop of Union Budget projecting a widening of fiscal deficit amid slowing economy and hardening inflation. Investors paid no heed towards Fitch Ratings’ statement that India is expected to clock a GDP growth of 5.6% in the next financial year, as Budget 2020 has not materially altered its view on the country's growth outlook.

On the global front, Asian markets ended higher on Tuesday, while European markets were trading in green, following the positive cues overnight from Wall Street and as the Chinese market rebounded after sharp losses in the previous session amid concerns about the rapid spread of the coronavirus as well as its impact on the global economy. Stimulus plans announced by China to support its economy has bolstered investors’ sentiment. Chinese health officials said that the death toll in the country related to the coronavirus outbreak was 425, while the number of people infected rose to 20,438. Back home, steel sector stocks were in focus after ratings agency India Ratings and Research (Ind-Ra) revised its outlook on the steel sector to 'stable-to-negative' for the remainder of the ongoing fiscal due to sluggish steel demand growth expectations.

The BSE Sensex ended at 40785.92, up by 913.61 points or 2.29% after trading in a range of 40117.46 and 40818.94. There were 28 stocks advancing against 2 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 1.44%, while Small cap index was up by 1.25%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 3.32%, Metal up by 3.32%, Oil & Gas up by 3.12%, Energy up by 2.99% and PSU up by 2.79%, while there were no losing indices on BSE sectoral front. (Provisional)

The top gainers on the Sensex were Titan Company up by 7.18%, ITC up by 3.95%, HDFC up by 3.73%, Tata Steel up by 3.65% and Hero MotoCorp up by 3.61%. (Provisional)

On the flip side, Bajaj Auto down by 4.09% and Hindustan Unilever down by 1.10% were the top losers. (Provisional)

Meanwhile, expressing cautiousness over India’s economic growth, Fitch Ratings has said the country is expected to clock a Gross Domestic Product (GDP) growth of 5.6% in the next financial year (FY21) from 4.6% in FY20. It added that Budget 2020 has not ‘materially altered’ its view on the country's growth outlook. It also said ‘the fiscal slippage announced in the government's new FY21 budget is modest relative to its previous targets, and is consistent with our expectations when we affirmed India's 'BBB-' rating with a stable outlook last December, given slowing growth momentum’. Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8% of GDP in FY20 as compared to 3.3% previously planned. The fiscal deficit target for FY21, has been fixed at 3.5%.

It projected general government debt to remain close to 70% of GDP through FY22 and said that the new budget targets imply some further postponement of fiscal consolidation, in line with the government's ambivalent approach to consolidation of the past few years when deficit outturns have typically exceeded budget targets. It added that India's high public debt relative to peers is a rating weakness. The report further noted that Budget contains some measures which may support GDP growth in the medium-term, including reduced individual income tax rates, some easing of restrictions on foreign portfolio inflows, continued focus on public infrastructure spending, and schemes of which the details remain to be announced to encourage manufacturing in the electronics and textiles sectors.

The rating agency said the assumptions in the budget, including nominal growth of 10% and a rise in revenues by 9.2% were ‘broadly credible’ although there were risks to the downside. It said ‘In particular, reductions in the corporate tax rate, as previously announced, and new cuts in income tax rates are likely, in our view, to cause tax revenues to fall in the short run, before any potential medium-term benefits materialise; the divestment target appears optimistic, at over three times the estimated realisation in FY20’. It also said ‘greater fiscal transparency around off-budget financing is welcome, as the new budget now explicitly recognises borrowing from the National Small Savings Fund of 0.8% of GDP in both FY20 and FY21’

The CNX Nifty ended at 11982.45, up by 274.55 points or 2.34% after trading in a range of 11783.40 and 11986.15. There were 45 stocks advancing against 5 stocks declining on the index. (Provisional)

The top gainers on Nifty were Titan Co up by 7.30%, Bharti Infratel up by 5.67%, Indian Oil Corp. up by 5.60%, Bajaj Finserv up by 4.94% and BPCL up by 4.34%. (Provisional)

On the flip side, Zee Entertainment down by 5.30%, Bajaj Auto down by 3.76%, Yes Bank down by 2.92%, Eicher Motors down by 1.81% and Hindustan Unilever down by 0.87% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 99.72 points or 1.36% to 7,426.03, France’s CAC rose 71.26 points or 1.22% to 5,903.77 and Germany’s DAX was up by 144.93 points or 1.11% to 13,190.12.

Asian markets ended higher on Tuesday as Chinese markets reversed some of their previous session's plunge on the back of stimulus measures announced by China to support the economy and markets amid the deadly corona virus outbreak. As the death toll in mainland China from the new type of virus rose to 425, China has agreed to allow US health experts into the mainland as part of a WHO effort to help fight the corona virus. Further, Japanese stocks closed higher by tracking a rebound in Shanghai shares, although exporters ended broadly lower on a slightly stronger yen.