Equity benchmarks the Sensex and the Nifty ended in the green on January 31 after the Economic Survey 2022-23 portrayed an optimistic picture of the Indian economy amid global headwinds.
The Survey projected India's baseline GDP growth of 6.5 percent in real terms in FY24 and said that the projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI.
The government's flagship economic document highlighted that India's growth is expected to be brisk in FY24 as a vigorous credit disbursal, and the capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors.
It said that further support for economic growth will come from the expansion of public digital platforms and path-breaking measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output.
Mitul Shah, Head of research at Reliance Securities said the Economic Survey outcome is positive for the market as an upgrade in FY23 GDP growth expectation of 7 percent augurs well, while FY24 Inflation at below 6 percent, within RBI’s targeted range provides major relief.
However, Shah added that the FY24 GDP growth of 6-6.8 percent is a tad below the desired 7 percent+ range. Preference for growth over fiscal deficit would be the key trigger for market sentiment going ahead. Other parameters in terms of GST collection, direct taxes and other revenues are encouraging in this challenging global economic environment.
Sensex remained volatile during the session amid weak global cues. Major US, European and Asian indices fell ahead of the US Fed meet outcome later on February 1.
Sensex ended 49 points, or 0.08 percent, up at 59,549.90 while the Nifty50 ended the day at 17,662.15, up 13 points, or 0.07 percent.
However, the mid and smallcap space witnessed strong traction. The BSE Midcap index rose 1.47 percent while the Smallcap index jumped 2.21 percent.
The overall market capitalisation of BSE-listed firms jumped to ₹270.2 lakh crore from ₹268.5 lakh crore in the previous session, making investors richer by ₹1.7 lakh crore in a single day.
For domestic investors, the Union Budget 2023 on February 1 is a crucial event, followed by the US Fed outcome.
Experts believe that the FY24 Union Budget needs to balance supporting growth in economic activity and fiscal consolidation.
Crude oil prices fell amid concerns over interest rate hikes by the US Fed. Moreover, hopes of demand recovery were dented by Russian crude flows. Brent Crude traded nearly a percent lower at $84 per barrel.
The rupee fell 42 paise to end at 81.92 per dollar.
Meanwhile, the follow on public offering (FPO) of Adani Enterprises Ltd was oversubscribed 1.02 times on its final day, driven by a strong response from non-institutional investors (NIIs) and qualified institutional buyers (QIBs).
Retail investors, however, stayed away from the FPO subscription because of the significant price difference in stock price and the FPO price band.
Top Sensex gainers: Mahindra and Mahindra, UltraTech Cement and Power Grid ended as the top gainer stocks in the Sensex index.
Top Sensex losers: TCS, Bajaj Finance and Tech Mahindra ended as the top loser stocks in the Sensex kitty.
The Nifty PSU Bank index jumped 4.28 percent after the Economic Survey said the finances of the public sector banks (PSBs) have seen a significant turnaround, with profits being booked at regular intervals and their non-performing assets (NPAs) being fast-tracked for quicker resolution/liquidation by the Insolvency and Bankruptcy Board of India (IBBI).
The Survey added that the government has been providing adequate budgetary support for keeping the PSBs well-capitalised, ensuring that their Capital Risk-Weighted Adjusted Ratio (CRAR) remains comfortably above the threshold levels of adequacy.
Nifty Media (up 2.37 percent), Auto (up 1.89 percent), Metal (up 1.52 percent), Consumer Durables (up 1.32 percent) and Realty (up 1.12 percent) also logged healthy gains.
On the flip side, Nifty IT (down 1.18 percent), Oil & Gas (down 1.12 percent), Pharma (down 0.99 percent) and Healthcare (down 0.79 percent) fell up to a percent.
Experts' views on markets
Vinod Nair, Head of Research at Geojit Financial Services said the Indian market has been underperforming compared to the rest of the world because it has been trading at premium valuations, which is in contrast to the moderation forecasted in the domestic economy for FY24.
"The premiumisation has tapered, currently trading in line with developed markets like the US; however, we continue to trade at a premium to other emerging markets. The Adani saga has prolonged the correction as FII selling has increased. Now the focus is on the outcome of the Budget and Fed policy, on which the market has a mixed view," said Nair.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities pointed out that the key indices eked out modest gains in an extremely volatile trading session, as investors resorted to profit-taking ahead of the Union Budget announcement. Also, the US Federal Reserve meeting on the interest rate decision tomorrow prompted investors to take selective bets with a cautious stance.
Technical views by experts
Rupak De, Senior Technical Analyst at LKP Securities observed that the Nifty remained volatile within a small band. The sentiment, however, remained a bit weak, favouring the sell-on-rally approach.
"The current trend may remain intact as long as it remains below 17,800. On the lower end, support is visible at 17,400. Over the near term, the Nifty will remain in a broader range of 17,400–17,800. Any breakout on either side is likely to create a directional movement in the market," said De.
Rohan Patil, Technical Analyst, SAMCO Securities pointed out that the Nifty reversed from the support zone and managed to close above its 200 EMA placed at 17,550 levels.
"A relief rally can be expected up to 17,900 levels from where selling pressure may be witnessed again until 18,050 - 18,100 takes out on a closing basis. On the lower side, immediate support is seen at 17,550 and below that at 17,400 levels," said Patil.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.