12:50 PM: Sensex jumps 1,500 points, Nifty reclaims 14,700; 5 factors behind market rally

The Indian market continued celebrating Union Budget 2021 as the equity benchmarks Sensex and Nifty extended gains into the second session on February 2.

The 30-share pack Sensex jumped over 1,500 points while Nifty rose above 14,700 in the morning session of trade.

At 11:45 hours, Sensex was 859 points, or 1.77 percent, up at 49,460 and Nifty was 248 points, or 1.74 percent, up at 14,530.

In sync with the benchmarks, BSE Midcap and Smallcap indices too were up over a percent each at that time.

Here are the top 5 factors that are keeping the market higher:

Budget boost: Analysts pointed out that the Budget has avoided significant negatives for the market and there are many positive takeaways.

Though the government introduced agri infrastructure cess, there was no COVID tax which was widely feared. Besides, the government stayed away from making any change in personal and corporate tax, there was no levy of wealth tax, super-rich tax, STT and LTCG.

Ajit Mishra, VP Research, Religare Broking advises investing in agriculture & allied sectors, autos, banks, FMCG and healthcare in a staggered manner.

“The Budget has been positive for the markets which led to the rally. At this point when the markets are hovering at the peak, we would advise investors to stick to large and mid-cap companies within sectors such as agriculture & allied sectors, autos, banks, FMCG, healthcare which are likely to benefit over the long term. We would advise investing in a staggered manner,” said Mishra.

Upbeat Asian cues: Positive sentiment in other major Asian markets also influenced the mood back home.

Asian shares rose higher on optimism about economic stimulus and global recovery as the Covid-led worries ease.

As per Reuters, markets were buoyant ahead of negotiations between the US President Joe Biden and Republican senators on a new COVID support bill. The GOP’s $618bn stimulus plan released early Monday was about a third the size of the President’s proposal. Top Democrats later on Monday filed a joint $1.9 trillion budget measure in a step toward bypassing Republicans.

Strong gains in auto, infra, financial heavyweights: Shares of HDFC twins, Larsen & Toubro, Maruti Suzuki and Mahindra & Mahindra jumped up to 5 percent, giving a boost to the market benchmarks.

Financial and auto stocks, along with several other sectors, rose as investors jumped to bet on them post the Union Budget 2021. Finance Minister Nirmala Sitharaman’s growth-oriented Budget seems to have raised the faith of investors in Indian companies.

“We recommend investors to have a higher allocation to equities to participate in the growth story. A reform-oriented Budget, adequate liquidity and improving corporate earnings provide all the levers for better returns on the equity portfolio,” said Vijay Kuppa, Co-Founder, Orowealth.

Foreign fund inflow: In the run-up to the Budget, the Indian market witnessed selling by foreign portfolio investors (FPIs) for the five consecutive sessions. However, it seems they are back with renewed vigour after the Budget was announced as NSE data shows they net bought worth Rs 1494.23 crore in the Indian market on February 1.

Technical factor: Nifty has support at 14,000 level and market analysts believe the index is inching close to the all-time high level.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, pointed out that the Nifty went on to cross the junction of the 40-hour exponential moving average and the hourly upper Bollinger Band. This shows that the benchmark index has resumed its larger uptrend and is on the course to test its all-time high of 14,753.

“On the way up, 14,500 will be an intermediate hurdle to watch out for. On the flip side, 14,000-13,900 will now act as a crucial short term support zone,” Ratnaparkhi said.

As per Chandan Taparia, Vice President and Derivatives and Technical analyst at Motilal Oswal Financial Services, Nifty formed a strong bullish candle on a daily scale on February 1 and regained more than half of the losses made in the last six sessions.

“Now, it has to continue to hold above 14,200 to witness a fresh move towards 14,500 then 14,750 zones, while on the downside, major support exists at 14,000 and 13,800 levels,” he said.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

News Source:- Moneycontrol

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