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Indian shares rise ahead of federal budget

Bengaluru - The NSE Nifty 50 index rose 0.83 per cent or 112.50 points to 13,747.10, while the benchmark S&P BSE Sensex was up 1.22 per cent or 565.03 points at 46,850.80.

Dubai — Indian shares rose on Monday ahead of the federal budget where Finance Minister Nirmala Sitharaman is expected to unveil several measures to bolster the economy following the impact of the Covid-19 pandemic.

The ruling party of Asia’s third-largest economy has promised a game-changing budget to revive the virus-hit economy, with Sitharaman likely to increase spending by more than 15 per cent in 2021-22, with an emphasis on infrastructure and healthcare, although the nation carries a mountain of debt.

There are also expectations that India will unveil some tax relief measures for pandemic-hit sectors such as real estate, aviation, tourism and automakers.

The NSE Nifty 50 index rose 0.83 per cent or 112.50 points to 13,747.10, while the benchmark S&P BSE Sensex was up 1.22 per cent or 565.03 points at 46,850.80.

Vijay Valecha, chief investment officer, Century Financial, said: “Indian stocks are expecting a major boost today as the Union budget comes out. The expectations from the FM (Finance Minister) majorly are the disinvestment of government entities, increase in government spending, deductions on medical insurance, clarity of digital tax and increase in tax brackets. The worst hit sectors during 2020 such as Real Estate, Banking, Automobiles and Railways are expecting a handsome stimulus package from the government this year.”

The markets have opened positive after a turmoil in the previous week, Nifty up 100 plus points at 13,750 and the Sensex is up 450 points towards 46,750. The expectations that the market has built around this budget is very optimistic and positive. Upside on the markets can be expected to be more than 2 per cent on the benchmark indices today, as the budget unfolds.

The blue-chip stock indexes rocketed to record highs earlier in 2021 as India started a huge vaccination drive and as corporates reported encouraging earnings, but in the days leading up to the budget they have fallen for six straight sessions up to Friday.

The indexes recovered from a pandemic-induced plunge in March last year to finish 2020 around 15 per cent firmer, their best performance since 2017, fuelled by strong foreign inflows amid massive liquidity in global markets and vaccine hopes.

Abhishek Goenka, founder and CEO, IFA Global, said: “A lot of hopes has been infused in the minds of people by the Indian FM Nirmala Sitharaman who stated that budget 2021-22 will “be a Budget like never before.” As far as financial markets are concerned the key points to watch out for in the budget would be the gross borrowing number and fiscal deficit target for FY22 along with the quality of expenditure and share of Capex in total expenditure, reforms in the banking sector and steps to deepen the bond markets, liberalization in FDI rules, disinvestment and strategic stake sale targets. Urban and Rural infrastructure, health infrastructure, housing, agriculture, domestic manufacturing are likely to be the focus areas in the budget. We see greater potential for positive surprises from the budget than negative ones.”

While India did not roll out stimulus packages on a scale comparable to its western counterparts, it has managed to pull ahead as daily virus cases declined sharply from September and several businesses returned to normalcy.

India’s economy is seen clocking robust growth of 11 per cent for the coming fiscal year, after likely contracting 7.7 per cent in the current fiscal year to March 31, an annual economic survey showed on Friday.

ICICI Bank Ltd rose as much as 4.1 per cent after reporting a jump in quarterly profit on Saturday.

Investors are also awaiting monthly sales numbers from automakers on Monday.

Goenka further added, “Slight miss of expectations shall push the markets into a frenzy. We expect the local equities to trade in a volatile manner. Profit booking, particularly by FPIs in the run up to the budget has already caused the Nifty to fall about 7 per cent from all-time highs. The level of 12800-13000 is likely to be a crucial support zone for the Nifty. With respect to rupee, 72.50 is an extremely crucial support a break of which could trigger stops in a knee jerk move. On the up side, the key level to watch would be 73.50, close above the same could open room for an up-side move in the medium term. Any sharp moves on either sides shall invite RBI to intervene and smoothen the volatility.” — sandhya@khaleejtimes.com