Budget euphoria keeps the market momentum going

Tuesday proved a day of jubilation for the Indian markets that showed remarkable strength in the background of the ‘Vote on Account’ presented by the Finance Minister P Chidambaram. Benchmarks after making a cautious start kept on improving with every passing hour of trade, though the gains were not sudden and there was some profit booking too in the last, but major indices steadily moved up and by the end of the trade, easily cruised past the crucial psychological levels of 20600 (Sensex) and 6100 (Nifty). The gains were spread across the sectors and broader markets too participated equally in the upmove.

The global cues however were not very supportive, as the US markets had not traded on Monday on account of Presidents Day holiday, while the Asian markets too made a mixed closing after Chinese policy makers drained funds from the financial system. The People’s Bank of China sold repurchase contracts for the first time since June today after data showed record new credit was extended last month. The European markets though made a positive start but gave up their gains in very early trade ahead of the German investor-confidence data.

Back home, the recoiling European markets too were unable to deter the domestic markets from inching higher and though the benchmarks gave up some gains in second half, they managed to post decent gains for the day. The markets gave a thumbs-up to the interim budget and all the sectors that directly got any advantage or were associated with budget proposals gained substantially. Banking was the top gainer for the day, up by over two percent on the BSE, mainly led by the gains in private sector banks. Meanwhile, the Finance Minister said that Reserve Bank of India (RBI) should strike a balance between price stability and growth when announcing its monetary policy. The decision of Finance Minister P Chidambaram to bring down excise duty on capital goods from 12 per cent to 10 per cent gave a breather to the sector. Separately, the metal stocks remained in upbeat mood since morning on value-buying, as the excise reduction in auto will impact the steel sector positively and also as investors bet on higher global prices with a spurt in Chinese buying. Chinese imports surged 53.2 percent in January from a year ago to a record high. There was some upmove in the gold related stocks after the report by World Gold Council that India's gold demand remained buoyant in 2013 and rose by 13% to 975 tonnes compared to 2012, despite government putting in several restrictions to curb imports. However, the defensive FMCG sector remained under pressure since beginning and ended as the laggard on the BSE. The IT and Tech sector stocks too came under pressure in final hours, as the rupee depreciated on pent-up dollar demand due to extended weakened in the US markets.

The market breadth remained in favour of advances, as there were 1,419 shares on the gaining side against 1,218 shares on the losing side, while 182 shares remained unchanged.

Finally, the BSE Sensex gained 170.15 points or 0.83%, to settle at 20634.21, while the CNX Nifty added 53.80 points or 0.89% to settle at 6,127.10.

The BSE Sensex touched a high and a low of 20685.02 and 20436.48, respectively.The BSE Mid cap index was up by 0.71%, while the Small cap index gained 0.80%.

The top gainers on the Sensex were Axis Bank up by 4.42%, HDFC up by 2.99%, ICICI Bank up by 2.80%, Maruti Suzuki up by 2.57% and Tata Power up by 2.45%, while, Gail India down by 1.45%, Bharti Airtel down by 0.95%, ITC down by 0.80%, Wipro down by 0.68% and Coal India down by 0.55% were the top losers in the index.

On the BSE Sectoral front, Bankex up by 2.34%, Capital Goods up by 2.09%, Power up by 1.73%, Metal up by 1.03% and Auto up by 0.96% were the top gainers, while FMCG down by 0.28%, OIL & GAS down by 0.06% and IT down by 0.02% were the top losers in the space.

Meanwhile, marking tenth consecutive month of decline, Indian exports of gold jewellery dropped in January, with outbound shipments declining by 23 per cent to Rs 2,993 crore. Cumulatively, gold jewellery exports from April to January fell 44.42 per cent to Rs 33,178 crore from Rs 59,693 crore in the corresponding period of the previous fiscal. However, in the first two months of the current fiscal, gold imports had crossed 300 tonne. Nevertheless, exports are expected to further fall due to no sign of any government incentives to revive the sagging shipments.

India has imposed a lot of restriction to bring down the imports of the yellow metal, which is the second biggest import item by value after oil. These measures include a rule that 20 percent of all gold shipped to be re-exported as jewellery, which makes it difficult for domestic jewellers and even exporters to get supplies despite high premiums. Besides the 80/20 import rule, the government has raised the customs duty thrice to 10 per cent in 2013.

However, in a development which has raised the hopes of improvement in imports of gold, finance ministry has said that India will review the curbs by the end of March, which coincides with the end of India's fiscal year.

The CNX Nifty touched a high and low of 6,141.70 and 6,066.80 respectively.

The major gainers of the Nifty were Jindal Steel & Power up 7.00%, Kotak Bank up by 4.64%, Axis Bank up by 4.28%, HDFC up by 2.91% and Tata Power up by 2.78%. On the other hand, GAIL down by 1.16%, ITC down by 1.11%, HCL Tech down by 1.08%, Wipro down by 0.95% and Bharti Airtel down by 0.75% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.50%, Germany's DAX was down by 0.10% and United Kingdom's FTSE 100 was down by 0.04%.

Most of the Asian equity indices concluded Tuesday's trade in green, after the Bank of Japan maintained remarkable asset purchases and encouraged lending programs. The yen weakened the most in a month after the Bank of Japan doubled a growth-funding facility. The Japanese central bank guaranteed to maintain plans to expand the monetary base by 60 trillion yen ($585 billion) to 70 trillion yen per year. It doubled a funding facility to 7 trillion yen and said individual banks could borrow twice, as much low interest money as previously under a second lending facility. Taiwan's GDP, on an unadjusted basis, advanced 2.95 percent year-on-year in the December quarter, which was slightly faster than the 2.92 percent gain the government had estimated in January.

Shanghai Composite fell, retreating from a two-month high, as the central bank drained liquidity from the financial system. The People’s Bank of China sold repurchase contracts for the first time since June today after data showed record new credit was extended last month. As per the government report, China's FDI climbed 16.1 percent to $10.76 billion in January from a year earlier. That compares with the 2.5 percent median growth forecast and a 3.3 percent rise in December.