After-Budget Party: Sensex bulls flirt with 50k again

Mumbai: The stock market soared for a second day on Tuesday as the government’s budget plans to stimulate the economy gave investors reason to be upbeat. Positive momentum from other global markets, sparked by growing optimism about the US stimulus plan, also pushed local equities higher, erasing all of last week’s losses. The Sensex crossed 50,000 earlier in the day but lacked enough steam to close above that level. It ended at 49,797.72, up 1,197 points or 2.46% over the previous day. The index had touched 50,154.48 on Monday. The NSE Nifty gained 366.65 points or 2.57% to close at 14,647.85.

Analysts said the Nifty faces a stiff hurdle at 14,750 levels, from which the index had reversed its recent upmove, falling over 7% in next six days till January 29. In the past two days, the Nifty and Sensex have gained over 7.5%, cheering the government’s commitment to a spending push to get the economy out of the Covid-induced slump.

‘Room for Mkts to go up Further’


“Foreign investors are happy that India has let go of the fixation with fiscal deficit and is focussing on growth,” said Amit Shah, head, equity research, BNP Paribas India. “There is room for the markets to go up further and that could be led by financials, which are relatively cheaper at the moment.”

Foreign portfolio investors (FPIs) bought shares worth a net ₹6,182 crore on Tuesday after pumping ₹1,849 crore into the market on Monday. They had sold shares worth a net ₹9,000 crore in the six sessions till Friday.

While Monday’s rally was also driven by relief that the government did not tax the rich further to fund its spending plans, the rise on Tuesday marked approval of the budget’s bid to revive growth.

“The revenues from growth can take care of the shortfalls later,” said Shah. “Investors are relieved that this budget is transparent and has given visibility to them and corporates. They like predictability and when that happens, markets attract liquidity.”