 "Nifty 50")
The Nifty hit a record high of 22,127, surpassing its previous intraday high on January 15. The index closed at 21,854, with a gain of 156 points
The benchmark equity indices bounced back sharply, rising by as much as 2 per cent on Friday, buoyed by the fiscal prudence shown by the government in its Interim Budget.
The softening in both the US as well as domestic bond yields spurred appetite for risky assets.
The benchmark Nifty50 index hit fresh highs on the intraday basis before giving up bulk of the gains due to profit-taking and concerns on expensive valuations.
The Nifty hit a record high of 22,127, surpassing its previous intraday high on January 15. The index closed at 21,854, with a gain of 156 points.
After jumping by over 1,400 points, the Sensex closed 440 points or 0.6 per cent higher at 72,086.
The stock rose 2.1 per cent and ended the session at Rs 2,913. RIL has the second-highest weighting in the Nifty.
The central government left direct and indirect taxes unchanged and kept its fiscal deficit target at 5.1 per cent, which triggered a rally in the bond markets.
“Because the government will borrow less, the 10-year bond yield comes off, and it becomes easier for the private capital expenditure story to begin. Any country where the 10-year bond falls is tantamount to an interest rate cut. Effectively, the finance minister is nudging the Reserve Bank of India for the first rate cut in the cycle. The odds of rate cuts before the elections are high,” said Saurabh Mukherjea, Founder and Chief Investment Officer of Marcellus Investment Managers.
Morgan Stanley in a note said the higher-than-expected fiscal consolidation is good news for macro stability but can be a slight drag on earnings.
“That said, the likely lower long-term yields augur well for equities. The lower government borrowing for the rest of this fiscal and next year is good for liquidity and the private sector banks,” the US-based brokerage said.
Analysts said the lower-than-expected fiscal deficit and government borrowing, will create space for the private sector to take on the mantle of capex growth.
When asked about profit booking after Nifty hit new highs, Mukherjee said domestic investors, who are driving the current rally, are feeling nervous.
“Most of them are first-timers, and they are, to an extent, alternating between greed and fear,” said Mukherjee.
Global cues were favourable on the back of robust earnings by global technology giants.
The 10-year US bond yield fell and was trading at 3.8 per cent. Chinese equity markets fell amid selling ahead of the Lunar Year Holiday.
Brent crude declined and was trading at $79. During the week, it had declined 5.2 per cent, the biggest weekly loss since October 6, 2023.
The market breadth was mixed, with 1,998 stocks advancing and 1,845 declining. More than two-thirds of Sensex stocks have advanced.
Apart from RIL, Infosys, which rose 2.3 per cent, TCS, which rose 2.9 percent, and NTPC, which gained 3.3 per cent, were the biggest contributors to Sensex gains.
Oil and gas stocks gained the most and rose 4.2 per cent.
Foreign investors were net buyers worth Rs 70 crore, and domestic institutions bought shares worth Rs 2,463 crore, according to provisional data from exchanges.
From now on, investors will track the RBI’s monetary policy and the geopolitical situation in West Asia for further cues.
“If the situation in West Asia resolves, the Indian market will move up 4-5 per cent quickly,” Mukherjea added.
First Published: Feb 02 2024 | 7:48 PM IST
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