Benchmark indices Sensex and Nifty closed 5% higher on Monday as market participants reacted positively to the announcements by Finance Minister Nirmala Sitharaman in Union Budget 2021. Sensex ended 2,314 points higher at 48,600 and NSE Nifty 50 index gained 646 points to 14,281. During the session, Sensex surged 2,478 points to hit the day's high of 48,381. Similarly, NSE rose 701 points to hit intraday high of 14,336.
Almost all the sectors closed in the green territory today, rising in the range of 3-6%. Selling was witnessed in pharma and IT stocks. Market breadth favoured advances with the advance-decline ratio at 5:2.
Indices recorded the biggest Budget Day gain ever since 1997 as the first digital Budget 2021 ticked all the right boxes for the equity market, with heavy buying seen in PSU banks, banking, infra and metal stocks.
Last Friday, S&P BSE Sensex, tumbled 588.59 points or 1.26% to 46,285.77. The Nifty 50 index lost 182.95 points or 1.32% to 13,634.60. On last year's budget announcement, Sensex had crashed 2.43% and closed below 40K.
The 2021 Union Budget announcements that cheered investors today included hike in foreign direct investment (FDI) limit in insurance from 49% to 74%, scrappage policy for vehicles, privatisation of two nationalised banks and proposal of monetisation of assets. Absence of the much-feared COVID cess and the surcharges on Income Tax also boosted market sentiment.
Anshuman Singh, Chairman, and Managing Director, Stellar Value Chain Solutions said: "The government's focus on infrastructure development and the budget proposal for a sharp increase in capital expenditure for FY2021-22 will make the supply chain more agile and operationally efficient. The proposal to monetise dedicated freight corridors and airports will open up a new frontier of supply chain solutions and these are steps in the right direction."
On the currency front, the Indian rupee depreciated by 6 paise to end at 73.02 per dollar on Monday due to fiscal concerns after the government projected a higher fiscal deficit for 2020-21 and increased borrowing target in the budget
Overseas, Asian and European markets reversed trend and traded higher today as Chinese manufacturing activity in January came in at 51.5.
US markets closed lower on Friday after COVID-19 vaccine data from Johnson & Johnson hurt sentiment, while a standoff between Wall Street hedge funds and small, retail investors weighed. Weekly unemployment claims also dipped below 9,00,000 while personal income rose more than expected in December.
V.P. Nandakumar, MD & CEO, Manappuram Finance said,"A progressive and growth-oriented budget presented under difficult circumstances that has also given serious consideration to some of the persistent problems of the banking and financial services sector. We are pleased that the FM has reduced the eligible loan amount for recovery under the SARFAESI Act for NBFCs. It will help in strengthening the NBFC sector by improving credit discipline among borrowers. The one concern we have is about the elevated fiscal deficit and its potential inflationary impact. Going forward, the onus will be on the government to ensure that the deficit levels are progressively brought down in tune with its projections."
After Budget 2021-2022, macro data, ongoing corporate earnings season and global market performance will impact stock markets movement this week.