Mid-day Mood | Nifty, Sensex jump ahead of Budget 2024; pharma, bank gain

HNIs usually are more focused on wealth creation than wealth conservation.

The Sensex and the Nifty made a smart recovery to trade higher at mid-day with heavyweights taking the lead, as investors braced for Interim Budget 2024-25 to be presented next day.

Participants were also waiting for the Federal Reserve’s policy meeting outcome expected later in the day.

Markets erased morning losses and were up nearly a percent at noon. At 11:58 am, the Sensex was up 661.80 points, or 0.93 percent, at 71,801, and the Nifty was up 198.90 points, or 0.92 percent, at 21,721. About 2,136 shares advanced, 1,050 declined, and 68 shares unchanged.

Fear gauge the India VIX was hovering around 9-month high levels of 16, indicating that investors remain undecisive ahead of the Budget. Analysts expect domestic equities to remain range-bound till the two large events unfold.

The broader markets mirrored BSE Midcap index rose 0.9 percent and BSE Smallcap index outperformed benchmarks by rising 1.3 percent.

Sectoral trends

Sectorally, Nifty pharma led the gains, rising nearly 2 percent. Nifty bank was up over a percent. Nifty auto, metal, infra and PSU Bank were up half a percent. The Nifty FMCG index also erased losses to trade higher.

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Fundamental view

The Fed decision and the interim Budget will weigh on markets in the near term. The domestic market will focus on any proposals regarding taxation of capital market investments. The fiscal deficit and its glide path also are important since growth with stability is hugely important from the market perspective, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

"Stock-specific movements are likely in response to sectoral allocations in the Budget. The decline in the 10-year yield to 4.02 percent is positive since it will restrain FPI outflows," he said.

Technical view

The Nifty has witnessed a splendid move in FY24 and the last quarter seems to remain in line with the ongoing trend, an Angel One report said.

"The cycle of higher highs–higher lows is certainly visible on the daily time frame with in-between time-wise correction phases, construing positive development for a bullish market," it said.

As far as levels are concerned, 21,200-21,000 is to be treated as immediate support and slip can see the index slide another 500-600 points. If this happens, then investors/traders are advised to start nibbling into quality propositions.

On the flip side, the 22,000 mark will likely be an intermediate hurdle before the Nifty reclaims its high of 22,125 and continues its northward journey into uncharted territory in the near future, the brokerage said.

According to Angel One analysts, the undertone favours the bulls. "However, a conservative approach is advisable after the recent accomplishments, and traders should remain selective in their approach, emphasizing more on the themes poised for outperformance," they said.

Bank Nifty index is positioned at an attractive zone close to its 200-DEMA and any positive development for the sector in the budget could provide impetus for further impulsive move higher in the index, Angel One.

However, in the short term, one should avoid getting carried away by in-between rallies. The immediate future for this important space looks a bit challenging, the brokerage said.

"At present, 44,800 is to be seen as a make or break level. Any further disappointment in this space, would challenge this support to test the crucial support zone of 43,500 - 42,000. On the flipside, 46,500 - 47,500 are to be treated as near term hurdles, " said Angel One.

Once the uncertainty or short-term pain subsides, Bank Nifty can retest recent highs of around 48,600 first and then 50,000 in months to come, it added.

Also Read | Tata Motors soars over 10% in 5 days to fresh record high on hopes of solid Q3 earnings

Key Nifty gainers

Dr Reddys Labs, Axis Bank, Sun Pharma, Eicher Motors, Tata Motors

Key Nifty losers

L&T, Titan Company, Hero Motocorp, Britannia, ONGC

Key Sensex gainers

Axis Bank, Sun Pharma, Tata Motors, HDFC Bank, ICICI Bank

Key Sensex losers

L&T, Titan Company, NTPC, HUL, Nestle

Stock moves

Tata Motors: The automaker extended its winning run to the fifth straight session. The stock has surged over 10 percent during the period to scale a fresh record high of Rs 896.50 on January 31.

Cochin Shipyard: The PSU stock jumped over 7 percent to hit a fresh record high of Rs 945 on January 31, a day after the company reported robust earnings for the December quarter.

KEC International: The stock jumped 6 percent to Rs 664 in the early trade on January 31 after the company announced a five-fold increase in its net profit for December quarter.

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