Post Session: Quick Review

Indian equity benchmarks continued their pre-budget rally for yet another day led by healthy buying in IT sector’s stocks. After making positive start, indices continued their gaining momentum till the end of the session amid value buying by investors. 

Some of the important factors for the markets:

Traders eyeing tax reforms in upcoming budget: Union Finance Minister Nirmala Sitharaman will present the Union Budget 2025-26 on February 1. Most taxpayers are very hopeful of major income tax changes. Some of these expectations include changes in income tax slabs under the new tax regime, introducing more benefits in old regime, and a hike in various exemptions and deductions.

U.S. Fed decision: Federal Reserve's first interest-rate decision in 2025 due later in the day. The Fed is widely expected to leave interest rates unchanged. 

RBI to conduct USD/INR buy-sell swap auction: The Reserve Bank of India (RBI) has said that it will conduct a USD/INR buy-sell swap auction of $5 billion (about Rs 43,000 crore) for a tenor of 6 months on January 31, 2025 as part of its over Rs 1.5 lakh crore liquidity injection into the banking system.

Global front: European markets were trading mostly in green as global markets recovered from a tech selloff sparked by concerns over the emergence of a low-cost Chinese AI model. Investors also digested a slew of corporate earnings results. Japan stock market -- Nikkei 225 Index ended higher amid US Fed's interest rate decision later in the day.

The BSE Sensex ended at 76,532.96, up by 631.55 points or 0.83% after trading in a range of 75,975.80 and 76,599.73. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 2.54%, while Small cap index up by 3.28%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.10%, Industrials up by 2.94%, Capital Goods up by 2.70%, IT up by 2.65%, Basic Materials up by 2.30%,  while FMCG down by 0.30% was the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Zomato up by 6.79%, Tata Motors up by 3.29%, Infosys up by 2.73%, Ultratech Cement up by 2.38% and Tech Mahindra up by 2.31%. On the flip side, Maruti Suzuki down by 1.18%, Asian Paints down by 0.87%, Bharti Airtel down by 0.85%, ITC down by 0.55% and Axis Bank down by 0.08% were the top losers. (Provisional)

Meanwhile, ahead of Union Budget on February 1, the Federation of Indian Chambers of Commerce and Industry (FICCI) in its Pre-budget 2025-26 Survey showed that about 64 per cent of industrialists expressed optimism regarding India’s growth. According to the survey results, nearly 60 per cent of participants projected a GDP growth rate between 6.5 and 6.9 per cent for 2025-26. Though the numbers mark a moderation from the high growth of over 8.0 per cent witnessed in 2023-24 - it is in sync with persistent headwinds on account of external factors. 

The survey said ‘The Government’s commitment to fiscal consolidation has put us in a good state and the survey participants expected the government to remain on that course’. According to the survey, about 47 per cent of participants expected the government to meet the fiscal deficit target of 4.9 per cent for FY 2024-25 and another 24 per cent reported that the government could improve and report a lower fiscal deficit number for the current year.

A significant focus of the survey was on macroeconomic policy interventions. The majority of respondents highlighted the need for sustaining public capital expenditure, with 68 per cent calling for a thrust on capex to sustain the growth momentum. At least a 15 per cent increase in capex allocation for FY 2025-26 is being looked forward to by members of the Indian industry. Additionally, over half of the respondents emphasised the importance of reforms to further enhance the ease of doing business. Reforms pertaining to factors of production - particularly with respect to areas like land acquisition, labour regulations, and power supply - remain important.

Further, concern was expressed regarding the muted demand situation. A significant number of industry members have called for a review of the direct tax structure. A relook at the slabs and the tax rates is warranted as this could leave more money in the hands of people and spur consumption demand in the economy. The respondents also called for a strong policy push on simplifying the tax regime, incentivizing the development of green technologies/renewables and EVs, and easing compliances through digitization.

On the taxation front, providing tax certainty, addressing custom duty inversion, and rationalization of TDS provisions were highlighted as important themes by the participants. The participants also showed support for an amnesty scheme under customs, with 54 per cent favouring its introduction to enable swift resolution of disputes. The current round of FICCI’s Survey was conducted between late December 2024 and mid-January 2025. The survey drew responses from over 150 companies spanning diverse sectors, offering a comprehensive insight into India Inc’s sentiments amidst moderating economic growth.

The CNX Nifty ended at 23,163.10, up by 205.85 points or 0.90% after trading in a range of 22,976.50 and 23,183.35. There were 40 stocks advancing against 10 stocks declining on the index. (Provisional)

The top gainers on Nifty were Shriram Finance up by 4.41%, Bharat Electronics up by 3.47%, Tata Motors up by 3.33%, Wipro up by 2.92% and SBI Life up by 2.92%. On the flip side, Maruti Suzuki down by 1.20%, Bharti Airtel down by 1.11%, Asian Paints down by 0.83%, ITC down by 0.48% and Britannia down by 0.47% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 7.75 points or 0.09% to 8,541.62 and Germany’s DAX was up by 126.42 points or 0.59% to 21,557.00. On the flip side, France’s CAC was down by 26.51 points or 0.34% to 7,870.86.

Japanese market ended higher on Wednesday as weaker yen boosted export-related shares. Market sentiments improved further by Wall Street’s gains overnight as focus shifted to US mega-cap tech company earnings including Facebook owner Meta Platforms, Microsoft and Tesla, as well as the US Federal Reserve's first interest rate decision in 2025 due later in the day. Meanwhile most of the Asian regional markets including China, Hong Kong, Singapore and South Korea closed for Lunar New Year holidays. 

Japan’s Nikkei 225 gained 397.91 points or 1.01% to settle at 39,414.78.