Sensex Opens 350 Points Higher on Budget Optimism; IndusInd Bank & ICICI Bank Surge Over 5%

Mon, 1 Feb 09:30 am

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   Momentum Moves   

   SGX Nifty   

   12:30 pm   

   02:30 pm   

   Closing   

Asian stock markets climbed today as concerns over volatile retail trading receded and signs of an easing cash crunch in China aided sentiment.

China's short-term money market rate fell from a five-year high after the People's Bank of China injected funds in an effort to avoid a liquidity squeeze.

The Hang Seng is trading up by 1.8% while the Shanghai Composite is down 0.1%. The Nikkei is trading higher by 1.2%.

US stock markets closed about 2% lower on Friday amid concern about the implications of short-squeezes encouraged on internet forums.

The Dow Jones Industrial Average dropped 620 points on Friday, down 2%, to close below the 30,000 level for the first time since December. The Nasdaq Composite also slipped 2%.

Back home, Indian share markets have opened on a positive note, following the trend on SGX Nifty.

Benchmark indices made a strong start ahead of the Budget 2021, which will be presented by Finance Minister Nirmala Sitharaman in the Parliament at 11 am today.

The BSE Sensex is trading up by 334 points. Meanwhile, the NSE Nifty is trading higher by 86 points.

Tech Mahindra is among the top gainers today. Power Grid, on the other hand, is among the top losers today.

Both, the BSE Mid Cap index and the BSE Small Cap index have opened down by 0.1%.

Sectoral indices are trading on a mixed note with stocks in the banking sector and finance sector witnessing buying interest. Healthcare stocks are trading in red.

Shares of Sheela Foam and ICICI Bank hit their 52-week highs today.

The rupee is trading at 72.87 against the US$.

Gold prices are trading up by 0.1% at Rs 49,165 per 10 grams.

In news from the economic space, the Union Budget 2021 will be presented by Finance Minister Nirmala Sitharaman in the Parliament at 11 am today. The FM has promised a "never before" budget that would help revive economic sentiment in a Covid-19 impacted year.

As per reports, FM is likely to announce measures including a hike in infrastructure spending and tax cuts to boost the pandemic-hit economy, while deferring debt cut plans.

Sitharaman is likely to increase spending by more than 15% year-on-year in 2021-22 with an emphasis on infrastructure and healthcare, say senior officials and advisers involved in budget preparation.

Corporations and industry chambers expect the finance minister to unveil some tax relief measures for pandemic-hit sectors such as real estate, aviation, tourism and autos.

Reports also state that the government would also have to consider providing tax relief to small businesses and consumers.

Budget related stocks including infrastructure, construction, housing finance companies, along with PSU stocks, financials, healthcare and power and energy-related stocks will be in focus today.

Speaking of the Budget, in our new video series called Momentum Moves, Brijesh Bhatia talks about what traders can expect on budget day and this week.

Tune in to the video to find out more:

Moving on to stock specific news...

PVR and Inox Leisure are among the top buzzing stocks today.

Cinema halls across the country will be permitted to operate at full capacity from February 1 with adherence to COVID-19 safety protocols, Union Minister for Information and Broadcasting (I&B) Prakash Javadekar announced on Sunday.

According to the new guidelines, no film shall be allowed to screen in containment zones and states and union territories may consider "proposing additional measures" as per their assessment.

If any person visiting cinema hall is found Covid-19 positive the entire premise will have to be disinfected.

PVR share price is also in focus today as India's largest multiplex chain operator has launched a qualified institutional placement (QIP) offering last week, aiming to raise as much as Rs 8 billion by selling shares to institutional investors.

PVR has set a floor price of Rs 1,495.93 per share for this fundraise.

This is the second equity fund raise by PVR since the Covid-19 pandemic shut down movie theatres for more than six months.

In July last year, PVR raised Rs 3 billion from existing shareholders through a rights issue.

Inox Leisure had also raised Rs 2.5 billion through a QIP in November.

PVR share price and Inox Leisure share price have opened the day up by 2.9% and 2.3%, respectively.

Moving on to news from the FMCG sector, India's fast-moving consumer goods (FMCG) market expanded 4.2% in the last calendar year, twice the rate in 2019 despite manufacturing and distribution hurdles in late March and April, helped by the rise in the packaged food and hygiene segments as many Indians stayed home due to Covid.

The market for daily groceries and household products had grown 2.1% by volume in 2019, according to the latest study by global consumer research firm Kantar Worldpanel (formerly IMRB).

Except for beverages, which declined 3.8%, all other segments including personal care, household and foods witnessed significantly higher growth during the year.

Colgate global chairman Noel Wallace said he was pleased with the growth rebound that the oral care giant saw in India during the second half of 2020. "Generating 7% organic in the third quarter and just shy of 10% organic in the fourth, we think is a terrific performance," Wallace said on an earnings call.

During the December quarter, most FMCG companies posted high volume growth. Dabur and Marico posted 18% and 15% expansion, respectively while HUL volume growth was at 4%.

This rose in successive quarters was due to the gradual reopening of the economy as restrictions were progressively eased.

We will keep you updated on the latest developments from this space. Stay tuned.

Speaking of the FMCG sector, have a look at the chart below which shows the performance of BSE Sensex and BSE FMCG index since 2009:

While the Sensex has offered 393% returns since 2009, the BSE FMCG index has gone up a staggering 532% returns over the same period.

Richa Agarwal, lead Smallcap Analyst at Equitymaster, believes this outperformance could continue for many years.

With a rising population and standards of living, Indian's consumption demand for FMCG products will skyrocket over the coming years.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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