Markets log strong gains amid improved global sentiment

Indian equity markets witnessed a relief rally and logged strong gains on Tuesday, amid improved global sentiment. Benchmarks started the session on an optimistic note and stayed in green for the whole day, as sentiments got a boost with the Finance Ministry stating that Indian economy is expected to grow at 7 per cent in FY23 despite global headwinds. It noted that supported by the gains from high services exports, the moderation in oil prices, and the recent fall in import-intensive consumption demand, India's current account deficit is estimated to fall in FY23 and FY24, providing a buffer to the rupee in uncertain times. Some optimism also came with Minister of State for Finance Bhagwat K Karad stating that the government has taken various reforms following which asset quality of public sector banks has improved significantly with gross NPA ratio declining from the peak of 14.6 per cent in March 2018 to 5.53 per cent in December 2022.

Markets extended gains in second half of the session, taking support from the Retirement fund body, Employees' Provident Fund Organisation’s (EPFO) latest ‘Provisional Estimate of Net Payroll’ data report showing that India created 1485948 new jobs in the month of January 2023 as against revised figure of 1280613 in December 2022. Traders overlooked the Ministry of Labour and Employment’s statement that retail inflation for agricultural and rural workers increased to 6.94 per cent and 6.87 per cent, respectively, in February 2023, due to increases in prices of medicines, doctor's fees, and bus fares, among others. Traders also paid no heed towards a private report stating that India’s economic activity held steady in February though there were early signs of slowing consumption amid concerns of future growth prospects and hawkish monetary policy.

On the global front, Asian markets settled higher on Tuesday, while European markets were trading higher, as fears of contagion in the banking sector subsided after the rescue of Credit Suisse by UBS and moves by central banks to improve dollar liquidity. Investors also hoped for less-aggressive moves by the U.S. Federal Reserve on Wednesday to alleviate concerns about further damage to credit markets and smaller U.S. lenders.

Finally, the BSE Sensex rose 445.73 points or 0.77% to 58,074.68 and the CNX Nifty was up by 119.10 points or 0.70% to 17,107.50.

The BSE Sensex touched high and low of 58,133.33 and 57,730.09, respectively. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.66%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.57%, Financial Services up by 1.44%, Bankex up by 1.30%, Energy up by 0.99% and Capital Goods up by 0.90%, while IT down by 0.84%, TECK down by 0.61%, FMCG down by 0.56%, Healthcare down by 0.31% and Realty down by 0.12% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 3.11%, Bajaj Finance up by 2.94%, Titan Company up by 2.15%, Axis Bank up by 2.14% and Indusind Bank up by 1.94%. On the flip side, Power Grid Corporation down by 2.00%, Hindustan Unilever down by 1.88%, Tech Mahindra down by 1.19%, TCS down by 1.12% and Infosys down by 0.91% were the top losers.

Meanwhile, Minister of State for Finance Pankaj Chaudhary has said the income tax department raised tax demands amounting to Rs 13,566 crore during the last four financial years under the black money law to deal with undisclosed foreign income and assets. He said that 183 assessment orders were passed in 2021-22 and a demand of Rs 5,350 crore was raised under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. In the four fiscals starting 2018-19, a total of 349 assessment orders were passed and a demand totalling Rs 13,566 was raised.

He also stated that 648 disclosures involving undisclosed foreign assets worth Rs 4,164 crore were made during three months of a one-time compliance window, which closed on September 30, 2015, under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The amount collected by way of tax and penalty in such cases was about Rs 2,476 crore.

Further, he said whenever any instance of unaccounted/black money comes to its notice, the income tax department takes appropriate actions as per the provisions of the Income-tax Act, 1961. Such actions include conducting searches and surveys, assessment of income, levy of tax, imposition of penalty, and launching of prosecution, among others.

The CNX Nifty traded in a range of 17,127.70 and 17,016.00. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were HDFC Life Insurance up by 3.82%, Reliance Industries up by 3.21%, Bajaj Finance up by 2.89%, Bajaj Auto up by 2.76% and SBI Life Insurance up by 2.27%. On the flip side, Power Grid Corporation down by 1.93%, Hindustan Unilever down by 1.88%, Britannia Industries down by 1.50%, Tech Mahindra down by 1.17% and Divis Laboratories down by 1.05% were the top losers.

European markets were trading higher; UK’s FTSE 100 increased 107.17 points or 1.45% to 7,511.02, France’s CAC rose 113.32 points or 1.62% to 7,126.46 and Germany’s DAX gained 257.35 points or 1.72% to 15,190.73.

Asian markets settled higher on Tuesday amidst Wall Street gains overnight following easing fears of banking turmoil. The US Federal Reserve and five other central banks said they are taking action to boost dollar liquidity, as banking crises sweep the United States and Europe. Chinese shares gained, led by defense stocks after the nation's state assets regulator said it would encourage and support centrally administered military related state-owned enterprises (SOEs) to become stronger, better, and bigger. However, investors were cautiously awaiting Fed policy review in Wednesday with hopes of a smaller 25 bps hike in US interest rates. Meanwhile, Japanese market was closed for Vernal Equinox holiday.