Benchmarks trade in high sprit in early deals; Sensex nears 50K mark

Indian equity benchmarks extended their previous session gains with gap-up opening on Tuesday as market continued post Budget rally amid firm global cues. Markets made sharp up move in early session and are trading in fine-fettle with gains of over two and half percent each. Buying in all the sector indices, led by Capital Goods, Industrials and Bankex, supported the domestic indices. Traders took encouragement with a private report stating that the increase in healthcare outlay in the latest annual budget will lead India towards a healthier country and the thrust on infrastructure will boost growth and generate jobs. Some support also came in as foreign institutional investors (FIIs) turned net buyers in Indian markets after a five-day hiatus. FIIs net bought shares worth Rs 1,494.23 crore while domestic institutional investors net sold shares worth Rs 90.46 crore.

On the global front, all the Asian markets were trading higher with notable gains following the overnight rebound on Wall Street as the markets shrugged off worries about speculative trading by retail investors. Optimism about talks regarding US stimulus and the vaccination rollout picking up pace also boosted the markets. Back home, auto stocks were in limelight reacting to their monthly sales numbers. In scrip specific development, Tata Motors surged on reporting a 25.27 percent increase in total sales in January. PVR gained after the company raised Rs 800 crore via a QIP issue.

The BSE Sensex is currently trading at 49894.16, up by 1293.55 points or 2.66% after trading in a range of 49193.26 and 50058.85. There were 29 stocks advancing against 1 stock declining on the index.

The broader indices were trading in green; the BSE Mid cap index jumped 2.18%, while Small cap index was up by 1.72%.

The gaining sectoral indices on the BSE were Capital Goods up by 5.00%, Industrials up by 4.17%, Bankex up by 3.55%, Auto up by 3.06%, PSU up by 2.50%, while there was no loser.

The top gainers on the Sensex were Larsen & Toubro up by 8.00%, HDFC Bank up by 5.19%, Axis Bank up by 4.63%, HDFC up by 4.54% and Bajaj Finance up by 4.41%. On the flip side, Hindustan Unilever down by 0.14% was the sole loser.

Meanwhile, the 15th Finance Commission, in its latest report, has recommended that the states be given 42 per cent of the divisible tax pool of the Centre during the period 2021-22 to 2025-26 (FY22-26). The panel's report also provides a range for fiscal deficit and debt path of both the Union and states and also recommended additional borrowing room to states based on performance in power sector reforms. Finance Commission is a constitutional body that gives suggestions on Centre-state financial relations.

In order to maintain predictability and stability of resources, especially during the pandemic, the 15th Finance Commission has recommended ‘maintaining the vertical devolution at 41 per cent the same as in our report for 2020-21’. The Commission said it is at the same level of 42 per cent of the divisible pool as recommended by the 14th Finance Commission, and added that however, a required adjustment has been made of ‘about 1 per cent due to the changed status of the erstwhile state of Jammu and Kashmir into the new Union Territories of Ladakh and Jammu and Kashmir’.

As per the glide path, fiscal deficit should be 6 per cent in 2021-22, 5.5 per cent in 2022-23, 5 per cent in 2023-24, 4.5 per cent in 2024-25, and 4 per cent in 2025-26. As per the Commission, the gross tax revenues for a five-year period is expected to be Rs 135.2 lakh crore. Out of that, divisible pool (after deducting cesses and surcharges and cost of collection) is estimated to be Rs 103 lakh crore. States' share at 41 per cent of divisible pool comes to 42.2 lakh crore for 2021-26 period.

It said ‘including total grants of Rs 10.33 lakh crore and tax devolution of Rs 42.2 lakh crore, aggregate transfers to states is estimated to remain at around 50.9 per cent of the divisible pool during 2021-26 period’. Total transfers (devolution + grants) constitutes about 34 per cent of estimated Gross Revenue Receipts of the Union leaving adequate fiscal space for the Union to meet its resource requirements and spending obligations on national development priorities.

The CNX Nifty is currently trading at 14657.50, up by 376.30 points or 2.63% after trading in a range of 14469.15 and 14699.80. There were 47 stocks advancing against 3 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 8.87%, Larsen & Toubro up by 7.94%, HDFC up by 5.21%, UPL up by 5.07% and HDFC Bank up by 5.02%. On the flip side, Hero MotoCorp down by 1.22%, HDFC Life Insurance down by 0.46% and Hindustan Unilever down by 0.16% were the few losers.

All the Asian markets were trading higher; Nikkei surged 261.91 points or 0.93% to 28,352.96, Straits Times rose 18.81 points or 0.65% to 2,915.13, Hang Seng jumped 523.05 points or 1.81% to 29,415.91, Taiwan Weighted soared 410.08 points or 2.66% to 15,820.17, KOSPI gained 47.56 points or 1.56% to 3,104.09, Jakarta Composite added 6.79 points or 0.11% to 6,074.34 and Shanghai Composite was up by 19.14 points or 0.55% to 3,524.42.