Sensex, Nifty open higher ahead of Budget; Ultratech, M&M, Bajaj twins lead

Indian equities opened higher on Tuesday ahead of the Union Budget presentation by the Union Finance Minister Nirmala Sitharaman today. FM Sitharaman will present Budget 2024 in Parliament at 11 AM today, which is going to be the first full Budget of the Narendra Modi-led NDA government in its third term.

The BSE Sensex opened higher at 80,731, up by 230 points, or by 0.30%, and the NSE Nifty belled at 24,570, up by 61 points, or by 0.25%. In line with benchmark indices, broader market also gained in opening trade, rising up to 0.3%.

The top gainers on the BSE Sensex pack were Ultratech Cement, M&M, Bajaj Finserv, L&T, and Bajaj Finance, rising in the range of 0.7% to 1.5%.

On the flip side, HCL Tech was the top laggard with a 0.5% loss, followed by PowerGrid, HDFC Bank, and Tech Mahindra among others.

Reliance Industries (RIL) shares edged lower, after falling over 3.5% in the previous session, as investors digested its June quarter earnings report.

Market analyst expects Nifty to trade erratically during the Union Budget. The last few days have shown us significant support from FIIs, as their purchases have surged, says Deven Mehata, Research Analyst, Choice Broking. The foreign institutional investors (FIIs) bought equities worth ₹3,444 crore, while domestic institutional investors sold equities worth ₹1,652 crore on July 22.

“Nifty can find support at 24,450 followed by 24,400 and 24,300. On the higher side, 24,600 can be an immediate resistance, followed by 24,800 and 25,000,” he says.

India Volatility Index (India VIX), which calculates stock market volatility in India using the Nifty 50 index, was down nearly 10% at 14.9. It has witnessed a sharp correction following the 2024 Lok Sabha election results.

"A highlight of the Economic Survey, from the market perspective, is the data regarding corporate profitability which has quadrupled in 3 years from ₹5.3 lakh crores in FY20 to ₹20.6 lakh crores in FY24. For Nifty 500 companies the corporate profit to GDP ratio has risen to a 15-year high of 4.8% in FY24. The market, which in the long run is a slave of earnings, is discounting this sharp turnaround in earnings. Corporate profitability is likely to improve further in FY25. This can keep the market resilient despite elevated valuations,” says V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“The market participants will be closely watching for any tweaks in LTCGs tax. If there are no changes in LTCGs tax that will be a big relief for the market and the market is likely to react positively to that. Stock specific reactions will depend on the Budget proposals for specific sectors."

Shares of railway-related stocks such as Indian Railway Catering & Tourism Corporation Ltd (IRCTC), Rail Vikas Nigam Ltd (RVNL), Ircon International Ltd, Indian Railway Finance Corporation Ltd (IRFC), Titagarh Rail Systems Ltd, RITES Ltd, Railtel Corporation of India Ltd, and Jupiter Wagons remained in focus ahead of Budget announcements. In the Interim Budget in February this year, FM Sitharaman had allocated ₹2.52 lakh crore to the railways as gross budgetary support, plus an additional ₹10,000 crore from extra-budgetary resources.

On Monday, domestic bourses ended lower in volatile trade, extending losses for the second straight session, as investors turned jittery ahead of Union Budget 2024. The S&P BSE Sensex fell 102.5 points, or 0.13%, to close at 80,502 levels, while the Nifty50 slipped 22 points, 0.1%, to settle at 24,509 level. In sharp contrast, the BSE midcap index rose 1.27%, while the BSE Smallcap index settled 0.83% higher.

According to market experts, the conservative economic growth forecast for FY25, presented in the Economic Survey, as well as disappointing earnings by big players such as RIL, Wipro, Kotak Bank also injected volatility ahead of the budget. 

The Economic Survey pegged the country’s FY25 GDP growth in the range of 6.5%-7%. The Survey suggested that the government continued to stick to the fiscal glide path, with the fiscal deficit expected to drop to 4.5% of GDP or lower by FY26. This approach, it says, has helped keep the sovereign debt sustainable, keeping sovereign bond yields and spreads in check.