Budget delight: Sensex scales Mount 50K again; global trends, earnings to guide future course

The stock market saw its best Budget-day gain since 1997 on February 1

Equity benchmark Sensex scaled the 50,000-mark for the second time in a week on Tuesday, riding high on Union Budget 2021-22 and going ahead, global trends and corporate earnings would guide its future course, analysts said.

Markets roared back to life on Budget day (February 1) after falling since January 21. Cheering the Budget proposals, the BSE benchmark Sensex zoomed 2,314.84 points or 5 per cent to close at 48,600.61 on Monday.

This was the best Budget-day gain for the markets since 1997.

Continuing its winning ways on Tuesday, the benchmark jumped 1,197.11 points or 2.46 per cent to close at 49,797.72. During the day, it hit a high of 50,154.48, registering a gain of 1,553.87 points.

Read | Budget euphoria: Sensex soars nearly 1,200 points; Nifty tops 14,600

"It has been a picture-perfect rally in the last two sessions with the broader indices clocking record Budget Day gains in last over 20 years and extending them today as well. Although some profit-booking can be expected, but we expect stock-specific action to continue," said Rahul Sharma, Head - Technical & Derivatives Research, JM Financial Services.

Ajit Mishra, VP - Research, Religare Broking Ltd, said this Budget rally is expected to continue. However, participants should be selective in their approach now. Going ahead, global cues and corporate earnings would also be on the radar, he added.

Earlier on January 21, the benchmark had reached the momentous 50,000-mark. The 30-share BSE index had jumped to its all-time peak of 50,184.01 on that day.

"A growth and capex oriented Budget has provided ammunition to the bulls...," said S Ranganathan, Head of Research at LKP Securities.

Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities, said the growth-oriented Budget has ignited spark in all cyclical and economy driven sectors, including banking and NBFCs.

"The earnings season is throwing good earnings surprise which is also getting factored in stock prices. With clarity on growth and earnings, it will be ideal to focus on economy driven sectors like capital goods, construction, engineering, cement, power utilities, oil & gas, banks, Insurance and NBFCs," he added.

Markets had witnessed profit-taking in the last part of January after recording massive gains earlier in the month.

In 2020, the 30-share BSE Sensex made monthly gains in seven, while closing with losses in five.

March 2020 proved to be dreadful for the domestic stock markets, with the benchmark Sensex plunging a massive 8,828.8 points or 23 per cent during the month as concerns related to the impact of the coronavirus pandemic on the economy jolted investor sentiments.

Read | India's exports are on path of quicker recovery: TPCI

But stock indices soon returned to winning ways, helped by global and domestic liquidity support and growth optimism.

"Union Budget for FY22 spared any major tinkering on the tax rates, either direct or indirect. This outdid the market expectations of some form of Covid/wealth tax and therefore is a big positive for equity markets," according to a report by ASK Wealth Advisors.

Driven by the improved investor sentiment, the market capitalisation of BSE-listed companies is also rising and is currently at over Rs 196.67 lakh crore. The BSE-listed companies' market cap had crossed the Rs 100 lakh crore milestone on November 28, 2014.

In 2020, investors grew richer by Rs 32.49 lakh crore, helped by massive returns in the equity market which had a roller-coaster ride during the year hit by the coronavirus pandemic.

The BSE benchmark Sensex, the country's first equity index, was launched in 1986. On July 25, 1990, it had closed above 1,000 points. The benchmark closed above the 10,000-mark on February 7, 2006.

"Domestic equities extended their gains with benchmark index Sensex once against reclaiming 50,000 mark mainly on increased optimism among investors after favourable Union Budget.

"Additionally, strong cues from global markets also supported market rally today. The most crucial event of this year for domestic market Union Budget has turned out to be favourable and pro-growth for the economy," said Binod Modi, Head Strategy at Reliance Securities.

According to Jaideep Hansraj, MD and CEO, Kotak Securities, it has been a great Budget in the current pandemic.

"No tinkering on taxes, including personal tax and a giant leap of divesting two state-run banks and opening up of market by making way for the LIC IPO and foreign ownership in insurance companies has been a welcome move and the primary reason for the rise in stock market," he stated.