Sensex, Nifty trade higher ahead of Budget; metal, bank stocks lead rally

The Indian share market opened higher on Wednesday ahead of the Union Budget presentation by the Union Finance Minister Nirmala Sitharaman today. FM Sitharaman will present Budget 2023 in Parliament at 11 AM today, which will be the last full Budget of the Narendra Modi-led NDA government in its second term.

At 10:15 AM, the BSE Sensex was trading at 60,005.26, up by 455.36 points, or by 0.76%, and the NSE Nifty was at 17,781.9, up by 119.75 points, or by 0.68 %. During the session so far, the 30-share Sensex touched and intraday high and low of 60,066.87 and 59,807.68, respectively. Similarly, the NSE Nifty touched an intraday high of 17,815.3 and an intraday low of 17,735.7.

In line with benchmark indices, the BSE MIDCAP was at 24,882.05, up by 239.32 points or by 0.97%, while the BSE SMLCAP rose 269.41 points, or by 0.96%, to 28475.3 levels.

The top gainers on the BSE Sensex pack were ICICI Bank Ltd. (2.86%), Mahindra & Mahindra Ltd. (1.69%), Tata Steel Ltd. (1.63%), NTPC Ltd. (1.34%), and Power Grid Corporation of India Ltd. (1.29%).

On the flip side, Sun Pharmaceutical Industries was the top laggard with a 2.47% loss, followed by Tech Mahindra Ltd. (0.59%), IndusInd Bank Ltd. (0.51%), ITC Ltd. (0.27%), and Maruti Suzuki India Ltd. (0.09%), among others.

On the sectoral front, the BSE metal index and banking were among top performers, while oil and gas and power were among top laggards. The BSE Bankex index was at 46,634.3, up by 554.45 points, or by 1.2%, led by ICICI Bank, Kotak Mahindra Bank, Au Small Finance Bank, HDFC Bank, and Axis Bank.

The Market breadth, indicating the overall strength of the market, was strong, with 2,335 shares advancing against the total traded shares of 3,377. Meanwhile, 882 shares declined and 160 were unchanged.

Since the Narendra Modi-led government came into power in May 2014, the Nifty price movement of 10 trading days before and after the Budget shows quite an interesting trend. Except last year, every year since 2015, if the Nifty showed a downward trend before the Budget in the previous ten trading sessions, there was a positive surge afterwards, and vice-versa. This year in the last nine trading sessions, Nifty nosedived 503 points or 2.76%.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “The massive FPI selling in Indian markets have impacted market sentiments. NSDL data shows FPI selling of ₹28,852 crore in January. The actual selling in the cash market is a mammoth Rs 53887 crores in January. FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year. While China, Hong Kong and South Korea are up by 5.4 %, 10.4% and 8.4% respectively in January India is down by 2.4%. This kind of underperformance is unlikely to last long. FIIs are also hugely short in the derivatives market.”

“If the budget turns out to be good, with no unpleasant surprises, there can be short covering leading to spurt in the market. On the other hand, if there is some negative proposal like hiking the LTCGs tax to 20%, FIIs will continue to sell, pushing the markets further down. The Economic Survey reflects optimism on the growth and corporate earnings front. This augurs well for the markets in the medium term,” he added.