Closing Bell: Sensex, Nifty end lower on Budget day; PSU Banks shine, realty, metals drag

Indian equity indices ended with little change in the volatile session on February 1 after the Finance Minister has presented the inline Interim Budget with no big announcements. At close, the Sensex was down 106.81 points or 0.15 percent at 71,645.30, and the Nifty was down 28.20 points or 0.13 percent at 21,697.50.

We wrap up today's edition of the Moneycontrol live market blog, and will be back tomorrow morning with all the latest updates and alerts. Please visit https://www.moneycontrol.com/markets/global-indices/ for all the global market action.

I am pleased with how the budget has promised to focus on EV manufacturing and develop EV charging infrastructure in the country and I believe the positive push would offer the much-needed push toward green mobility. Typically, the reduction of the GST compliance burden is a highlight of this budget. Similarly, the government's push to strengthen the EV charging network across the country through rooftop solarization projects, is also commendable. I believe this would help EV charging infrastructure development companies to amp their charging and installation capacity and in turn address the root of range anxiety, promoting the adoption of electric vehicles across all segments.

Additionally, the reduction of GST compliance for trade and industry could ease the burden of EV entrepreneurs to some extent. However, I wish there were more announcements on the fronts of GST reforms to accelerate the growth of EV charging infrastructure and promote EV adoption in the country. While the budget’s emphasis on green mobility is commendable, I feel it missed an opportunity to uplift the EV sector’s niche segments, such as EV battery recycling.

Tata Motors is likely to see a robust growth in net profit and revenue in the fiscal third quarter, on the back of strong growth in Jaguar Land Rover volumes, price hikes, and superior product mix. The automobile major will announce its Q3 FY24 results on February 2.

According to the average estimate of six brokerages, Tata Motors’ net profit is expected to grow 54 percent on-year to Rs 4,547 crore in the October-December quarter. Revenue may gain 22 percent on-year to Rs 1,08,169 crore. EBITDA margin too is expected to see a sharp jump of 273 basis points to 13.63 percent. Read More

Zetwerk applauds the 2024-25 interim budget's focus on development, infrastructure, and clean energy. Increased infrastructure spending, including corridors and port improvements, will boost economic activity and logistics efficiency. The net-zero target and free rooftop solar project are commendable steps towards green integration. The decision to cut import duties on essential components for making mobile phones will be leveraged by the sector.

Upgrading railway bogies to Vande Bharat standards will enhance safety, convenience, and passenger experience, further bolstering our infrastructure and manufacturing activities.

The research and development corpus of Rs1 trillion and focus on developing deep-tech in the defence sector will prompt private companies to innovate and contribute to 'Atmanirbharta'."

These measures will generate employment and empower our youth. We believe that successful implementation of these plans will add further momentum to the tailwinds propelling the Indian manufacturing industry and economy in general. Overall, this budget positions the Indian economy for continued success in the near and mid-term.

Total sales up 21.6% at 4,33,598 units vs 3,56,690 units, YoY
Domestic sales up 18% at 420,934 units vs 3,49,437 units, YoY

Net profit rose 26% at Rs 311 crore against Rs 246.8 crore and revenue up 8.7% at Rs 1,437 crore versus Rs 1,322.2 crore, YoY.

FIIs net sell Rs 1,879.58 crore in equities and DIIs net buy Rs 872.49 crore in equities today (Provisional)

Net profit up 26.9% at Rs 34 crore versus Rs 26.8 crore and revenue up 20.8% at Rs 572.6 crore versus Rs 474.2 crore, YoY.

Net profit up 16.2% at Rs 253 crore versus Rs 217.8 crore and Net Interest Income (NII) down 7.2% at Rs 515.9 crore versus Rs 555.7 crore, YoY.

Net profit up 18.2% at Rs 476.9 crore versus Rs 403.6 crore and revenue up 16.5% at Rs 1,963.8 crore against Rs 1,685.8 crore, YoY.

Net profit flat at Rs 14.7 crore and revenue up 5.2% at Rs 134.7 crore versus Rs 128 crore, YoY.

Net profit down 27.6% at Rs 83 crore versus Rs 114.6 crore and revenue up 0.9% at Rs 2,345.2 crore versus Rs 2,323.5 crore, YoY.

On the first day of February, coinciding with the release of the interim budget by Finance Minister Nirmala Sitharaman, the major index NIFTY remained flat. In contrast, Bank Nifty and banking equities showed upward momentum throughout the trading session.

The market has traded Negative with the Sensex losing 0.15 percent and closed at 71645.30 and Nifty was down by 0.13 percent intraday and closed at 21697.45 levels whereas Bank Nifty closed positive, up by 0.42 percent and settled at 46188.65.

Among sectors Nifty PSU Bank, Nifty Auto and Nifty FMCG ended in green while Nifty Metal, Nifty Media and Nifty Infra ended on the lower side. In Nifty stocks, Maruti Suzuki, Cipla and Power GRID were the top gainers while Ultratech Cement, LT and Grasim were the prime laggards.

India VIX was negative by 9.97 percent intraday and settled at 14.45.

Index has a support around 21550-21400 zone. Coming to the OI Data, on the call side, the highest OI observed at 22000 followed by 21800 strike prices while on the put side, the highest OI is at 21700 strike price. On the other hand, Bank Nifty has support at 45700-45500 while resistance is placed at 46500 and 46650 levels.

The Rupee closed stronger to gain 8 paisa at 83.04 amid recovery in domestic equity markets and fall in dollar against major currencies, including India. Better economic growth forecasts for 2024 from the IMA as well as increase in India's growth forecast gave support to the rupee. We expect the rupee to remain in a range ahead of the U.S non-farm payroll data with the pair likely to trade in the range of 82.80-83.45.

The union budget presented today by the honourable Finance Minister has further strengthened the government’s commitment towards long- term social and infrastructure development. Though it is an interim budget due to the impending elections, today’s announcements by the Union Finance Minister are significant in many aspects. The 11.1% increase in infrastructure outlay which is 3.4% of GDP will further enhance the railway, roads and logistics infrastructure of the country. The three new economic railway corridors identified under the PM Gati Shakti program are massive projects with the potential to grow economic hubs and boost development of the tier-2 and tier-3 cities along their alignment. The intention to complete 2 cr housing units in the next five years will aid the ‘Housing for All’ mission of the government. Additionally, the proposed boost to housing for the middle-class living in sub-par accommodation is also a welcome inclusion. We look forward to the details of this as we expect this to have great long-term ramifications. Further, the enhanced focus on domestic tourism development will provide a fillip to the hospitality industry.

Nifty traded in a narrow range post-major event and closed with a loss of 28 points at 26697 levels. Sector-wise it was a mixed bag. Major buying was seen in government companies especially PSU Bank which was up 3% post-FM speech. On the global front, the US Fed concluded by maintaining its status quo and did not hint at an early rate cut which dampened global sentiments.

In the Interim Budget, the government emphasized empowering 4 pillars of Viksit Bharat namely Youth, Poor, Women, and Farmers. Further, the government continues to focus on consolidating the fiscal deficit and investing in infrastructure. Some of the sectors to benefit are affordable housing & finance, infra, railway, defense, and consumption. With two major events now behind, we expect markets to take support from the ongoing earning season and should remain in positive territory.

On the crucial budget day, the Nifty benchmark index kicked off with a modest positive start. However, unlike typical event days, there was limited momentum, and prices fluctuated within a 100-point range, eventually closing with a marginal loss of 0.13%, a tad below 21700.

While we expected no major announcement considering it being an interim budget, the surprise came from the narrow trading range making it a total non-event. The Nifty experienced a pattern of alternating between up and down days for the seventh consecutive day, indicating market uncertainty. Despite the hope that the budget would provide clarity on the near-term direction, the session proved to be disappointingly lackluster. Analyzing the last four candles, prices consolidated within the 21400-21850 range. The next significant trend will only become apparent with a breakout on either side of this zone. A breach below 21400 could lead prices towards recent lows of 21100, potentially triggering further decline. Conversely, surpassing 21850 may propel Nifty towards the 22000-22100 range. Given the recent irregularities, it is prudent for traders to focus on the intra-day trend to take a trade or wait for a breakthrough from the mentioned range before making bold moves.

In the upcoming session, the market may continue to respond to the aftermath of the budget announcement, with individual themes playing a significant role for traders seeking out performance opportunities. As the focus shifts from the key event, attention will revert to global developments, necessitating vigilance on the global front by traders.

Total sales up 2% at 76,187 units versus 74,746 units
Exports down 20% at 5,631 units versus 7,044 units

Net profit rose 69.5% at Rs 31.7 crore versus Rs 18.7 crore and revenue up 8% at Rs 856 crore versus Rs 792.3 crore, YoY

Nobody was expecting any major announcement in this Budget and hence we saw a range-bound trend with a negative bias. Global markets too were subdued and hence select profit-taking was seen in telecom and realty stocks.

Normally in an election year, we generally see a populist budget. However, the Honorable Finance Minister has put the growth in clear perspective with prudence taking over populism in this budget. It outlines development that will be all-round, all-inclusive, and all-pervasive towards making India a Viksit Bharat by 2047. FY23-25 interim budget has carried forward Govt focus on Net zero by 2070 (Rooftop Solarisation, Non fossil fuel, E vehicles), 11% higher capex allocation (18% effective increase) , higher allocation for PM Awas, MNREGA, Aquaculture and Tourism.

Fiscal situation seems to be in fine shape with CAD at ~1% of GDP and fiscal deficit at 5.8% of GDP with next year target at 5.1% of GDP. FY25 assumptions of 11.5% growth in GST and 11.7% in corporate tax and 13% in income tax look reasonable.

There has been no change in corporate and Income tax rates. Total debt has been lower than earlier estimates and FY25 gross markets borrowings with increased private capex will continue to provide growth capital and momentum to the economy. In a nut shell interim budget just ensures strong fiscal discipline and continuity of policies.

This Interim Budget the honorable Finance Minister has once again delivered a responsible, innovative and inclusive budget. This budget lays emphasis on Fiscal products and gives room for private capital investment into the growth of India. Continuing with the trends of the last 10 years, the FM once again lays on the foundation for a very strong path for India with due focus on areas of national importance.

The Nifty opened on a positive note and witnessed range-bound price action during the day. Despite being an event day, the range was narrow as compared to the recent trading sessions and the Nifty closed marginally in the red, down ~36 points. On the daily charts we can observe that the Nifty has been broadly stuck in the range of 21200 – 21900 for the last couple of weeks. The Nifty has been facing selling pressure at the 61.82% Fibonacci retracement level (21747) and has been unable to close above it on a closing basis. We believe that the range bound action is likely to continue. The daily momentum indicator has triggered a positive crossover while the hourly has a negative crossover. Moreover, prices are stuck in a range. Considering the divergent signals from price and momentum indicator, the Nifty is likely to witness range bound price action. Key support levels are 21550 – 21500 while immediate hurdle zone is placed at 21850 – 21900.

Bank Nifty witnessed continuation of the positive momentum. During the day, it was the bank Nifty which held on the crucial support zone of 45660 – 45700 where the hourly moving averages were placed and resumed its upmove. We believe that the Bank Nifty is likely to move higher towards 46570 – 46800 from short term perspective. The Daily momentum indicator has triggered a positive crossover which is a buy signal and is likely to provide speed to the upmove.

The interim budget was the much anticipated non-event which was seen through tight market movements as the Index oscillated in a narrow range to settle the day lower at 21,697.45 with a loss of 28.25 points. PSU Banking was the best-performing sector of the day by gaining over 3%; and on the flip side, Media and Metal segments corrected over 1%. A mixed activity was seen in the Auto and Pharma space. Divergence was seen in the Broader markets where Midcaps corrected and moved in tandem with the Benchmark Index while Smallcaps ended in green.

A small bearish candle was formed on the daily chart but the undertone remains bullish with the downside protected at 21,630 which is 21DMA support while the immediate resistance is placed at 21,840.

The Bank Nifty bulls demonstrated strength as the index closed above the 46000 level on the interim budget day. The overall undertone remains bullish, with support at 47800 providing a cushion for the bulls. On the upside, the immediate resistance is positioned at 46500, and a breakthrough at this level is anticipated to trigger sharp short-covering moves in the market.

Markets oscillated in a narrow range on the budget day and settled marginally lower. The tone was positive at the beginning however profit taking emerged around the previous swing high. Consequently, Nifty surrendered all its gains and finally settled closer to the day’s low at 21,697.45 level. Meanwhile, a mixed trend on the sectoral front kept the participants occupied wherein energy, auto and banking posted decent gains while metal and realty traded under pressure.

Markets are not in a hurry for the next directional move and the recent price action reaffirms our view. Traders have no option but to align their positions accordingly and focus more on stock-specific trading approach. Though we are seeing consistent outperformance from the broader indices despite the overbought condition, we feel it is prudent to restrict exposure and prefer only quality names.

Indian rupee ended marginally higher at 82.98 per dollar on Thursday versus Wednesday's close of 83.04.

Indian benchmark indices ended with marginal losses in a volatile session on February 1 (Budget day).

At close, the Sensex was down 106.81 points or 0.15 percent at 71,645.30, and the Nifty was down 28.20 points or 0.13 percent at 21,697.50. About 1467 shares advanced, 1762 shares declined, and 75 shares unchanged.

Top Nifty gainers were Maruti Suzuki, Cipla, Eicher Motors, SBI Life Insurance, Power Grid Corporation, while losers included UltraTech Cement, L&T, Dr Reddy's Laboratories, JSW Steel and Grasim Industries.

Mixed trend saw on the sectoral front, with auto, bank, FMCG and power added 0.2-0.8 percent, while capital goods, metal and realty down a percent each.

The BSE midcap index shed 0.4 percent, and the smallcap index ended 0.2 percent lower.

Lupin has received approval from the United States Food and Drug Administration (USFDA) for its Abbreviated New Drug Application for Dronedarone Tablets USP, 400 mg, to market a generic equivalent of Multaq Tablets, 400 mg of Sanofi-Aventis U.S. LLC. The product will be manufactured at Lupin’s Goa facility in India.

Dronedarone Tablets USP, 400 mg, are indicated to reduce the risk of hospitalization for atrial fibrillation (AF) in patients in sinus rhythm with a history of paroxysmal or persistent AF.

The government has positively surprised the bond markets by exceeding the fiscal consolidation roadmap by aggressively reducing the budgeted fiscal deficit by 70 bps to 5.1% in FY25 which provides the confidence of achieving fiscal glide path to below 4.5% well within timelines. As the gross borrowing number is Rs 1.3 trillion lower than market estimates, the bond demand-supply scenario for next year improves significantly, especially with the Rs 2-2.5 trillion of flows expected from foreign investors due to global index inclusion. Bond markets have cheerfully reacted to this and bond yields are down ~10 bps.

Sensex Today | Nifty Bank index up 0.4 percent led by PNB, Bank of Baroda, Axis Bank:

Net profit rose 13% at Rs 70.4 crore against Rs 62.3 crore and revenue down 9.1% at Rs 828.6 .4 crore versus Rs 911.4 crore, YoY.

The government has presented a very prudent Budget/Vote-On-Account for FY24-25. In an election year where stakes are very high, government has resisted the temptation, once again, for populism and instead shown excellent strategic sense by opting to continue on the path of fiscal consolidation.

The government is building in a 10.5% nominal GDP growth for FY25, a healthy 12% growth in revenue receipts. However spending growth is just 6%, within which revenue spending is expected to grow just 3% while the more productive capex spending is expected to grow 17% to INR 11.1 Trillion

The government’s commitment to a 4.5% Fiscal Deficit by FY26 is indeed commendable. Towards that effect, it has pencilled in a fiscal deficit of 5.1% for FY25, better than most economists' estimates. This augurs well for overall economic credit creation as indeed for inflation and private capex revival.

The 17% increase in Capital Expenditure allocation on the back of a 3x increase over FY19-24 (from INR 3 trillion to INR 9.5 Trillion) indicates the continued thrust of the government towards infrastructure creation and driving the private investment cycle.

What is a bit of a dampener, however is lack of any big push for consumption. Consumption has been weak, especially in Rural India, as indicated by corporate earnings for last few quarters. The budget doesn’t provide any near-term solution for quick revival for consumption.

I continue to remain bullish in the medium to long term.

Sensex Today | Market at 3 PM

The Sensex was down 20.99 points or 0.03 percent at 71,731.12, and the Nifty was down 10.90 points or 0.05 percent at 21,714.80. About 1454 shares advanced, 1768 shares declined, and 72 shares unchanged.