Firm trade continues over Dalal Street

Firm trade continued over the Dalal Street in late morning deals, with both Sensex and Nifty holding strong gains. Positive cues from other Asian markets helped key indices to remain higher. Domestic sentiments were positive, after India Ratings said the Budget numbers are more credible and achievable than in the past many years, and the government may even exceed the revenue targets if the current tax buoyancy level is maintained. Traders were also optimistic, as the US-India Business Council said that the annual budget presented by Finance Minister Nirmala Sitharaman has several bold initiatives that set the tone for an accelerated post-pandemic economic recovery and new opportunities for India’s social development.

On the global front, Asian markets were trading higher, even after consumer prices in South Korea were up 0.6 percent on year in January. The Statistics Korea said that beat forecasts for a gain of 0.3 percent and was up from 0.5 percent in the previous month. On a monthly basis, consumer prices jumped 0.8 percent - again exceeding expectations for 0.5 percent and up from 0.2 percent in the previous month.

The BSE Sensex is currently trading at 49422.80, up by 822.19 points or 1.69% after trading in a range of 49193.26 and 50154.48. 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 1.30%, while Small cap index was up by 1.09%.

The top gaining sectoral indices on the BSE were Auto up by 3.11%, Industrials up by 2.89%, Capital Goods up by 2.81%, Basic Materials up by 2.12% and Bankex up by 1.95%, while Energy down by 0.82% was the only losing index on BSE.

The top gainers on the Sensex were Ultratech Cement up by 6.11%, HDFC Bank up by 5.03%, HDFC up by 5.00%, Maruti Suzuki up by 4.01% and Larsen & Toubro up by 3.90%. On the flip side, Bajaj Finserv down by 2.29%, Indusind Bank down by 1.60%, Reliance Industries down by 1.58%, Hindustan Unilever down by 1.07% and Dr. Reddy’s Lab down by 0.87% were the top losers.

Meanwhile, Moody's Investors Service, while silent on the sovereign rating on the higher-than-expected fiscal deficit numbers, has expressed doubts over attaining the higher revenue targets and divestment realisation as assumed in the Budget.

The Union Budget 2021-22 has pegged a fiscal deficit of 9.5 per cent for the current financial year as against the consensus 7 per cent, and 6.8 per cent for 2021-22 with a market borrowing of around Rs 12 lakh crore. It also assumes Rs 1.75 lakh crore to be scooped up from divestment. The Fiscal Responsibility and Budget Management Act will also be amended to achieve a fiscal deficit of 4.5 per cent of GDP by 2025-26 only.

The rating agency said the fiscal deficit target of 6.8 per cent for 2021-22 tries to strike a balance between supporting growth and a modest deficit reduction, but improvements in tax compliance and monetisation targets may be difficult to achieve. Besides, it said the government has limited room to reduce spending without further weakening growth, and nominal GDP growth will remain critical for future deficit reduction.

The CNX Nifty is currently trading at 14518.20, up by 237.00 points or 1.66% after trading in a range of 14469.15 and 14731.70. There were 37 stocks advancing against 13 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 10.16%, Ultratech Cement up by 6.19%, Grasim Industries up by 5.18%, HDFC up by 5.16% and HDFC Bank up by 4.99%. On the flip side, Bajaj Finserv down by 3.00%, HDFC Life Insurance down by 2.80%, Hero MotoCorp down by 2.06%, Reliance Industries down by 1.63% and Indusind Bank down by 1.56% were the top 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.