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Benchmarks to make positive start on firm global cues

Indian markets notched record closing highs on Tuesday as the buying frenzy triggered by the Budget continued for the second day. Today, the start of session is likely to be positive following firm global cues. Though, higher crude oil prices may weight on the markets. Investors will be eyeing the services PMI data to be out later in the day. Traders will be taking encouragement with NITI Aayog Vice-Chairman Rajiv Kumar’s statement that the reform measures announced in the budget 2021-22 are aimed at taking India out of the COVID-19-induced downturn and making the country a better destination for private investment, both for domestic and foreign investors. Some support will also come with the commerce ministry’s data showing that the country’s exports grew 5.37 percent Y-o-Y to $27.24 billion in January 2021, mainly driven by healthy growth in pharma and engineering sectors. The trade deficit during the month narrowed to $14.75 billion from $15.3 billion in January 2020. It was $15.44 billion in December 2020. Besides, Foreign Institutional Investors (FII) were net buyers of domestic equities on Tuesday, pumping in a massive Rs 6,181 crore. Traders may take note of report that India has reported a net reduction of 4,882 to take its count of active coronavirus cases to 163,353, the lowest since June 19 and 83.95 per cent lower than the September 18 peak of 1,017,754. India’s share of global active coronavirus cases has declined to 0.63 per cent (one in 159). There will be some reaction in power sector stocks with the All India Power Engineers Federation’s (AIPEF) statement that intensifying stir against the Centre's privatisation policy, 1.5 million power sector employees of the country would resort to work boycott on February 3. Some banking stocks will be in focus as the finance ministry expects the remaining three public sector banks (PSBs) to be out of the RBI's prompt corrective action (PCA) framework in two months as their financial health has improved. There will be some reaction in sugar industry stocks with industry body ISMA’s statement that sugar mills have manufactured 25.37 per cent more sugar at 17.68 million tonnes in the first four months of the current marketing season ending September this year. Also, Brookfield's Real Estate Investment Trust (REIT) public issue will hit the capital market on Wednesday at a price band of Rs 274 to Rs 275 to raise up to Rs 3,800 crore. The public issue will close on February 5. Meanwhile, the shares of Home First Finance will make their market debut today. The company’s Rs 1,154-crore initial public offering, which ran from January 21 to 25, was subscribed 27 times.

The US markets ended higher on Tuesday on renewed hopes for US President Joe Biden’ proposed $1.9 trillion Covid-19 aid bill as the Senate voted to start a process that would allow Democrats to pass Biden’s package without Republican support. Asian markets are trading mostly in green on Wednesday tracking overnight gains on Wall Street.

Back home, Indian equity benchmarks extended their historic Budget-day rally into second day on Tuesday and ended nearly 2.5 percent higher, as investors continue to cheer Budget announcements amid positive global cues. Markets made a gap-up opening, as traders took encouragement with a private report stating that the increase in healthcare outlay in the latest annual budget will lead India towards a healthier country and the thrust on infrastructure will boost growth and generate jobs. Some support also came in as foreign institutional investors (FIIs) turned net buyers in Indian markets after a five-day hiatus. FIIs net bought shares worth Rs 1,494.23 crore while domestic institutional investors net sold shares worth Rs 90.46 crore. Key indices extended their gains in late afternoon session, after India Ratings said the Budget numbers are more credible and achievable than in the past many years, and the government may even exceed the revenue targets if the current tax buoyancy level is maintained. Traders were also optimistic, as the US-India Business Council said that the annual budget presented by Finance Minister Nirmala Sitharaman has several bold initiatives that set the tone for an accelerated post-pandemic economic recovery and new opportunities for India’s social development. Traders also took a note of S&P Global Rating’s statement that India's Budget for fiscal 2022 (ending March 31, 2022) represents a comprehensive effort by the Central government to shore up the country's nascent economic recovery. But the brawny spending programme also entails higher-than-expected general government deficits -- at more than 14 per cent of GDP this fiscal year and 11.6 per cent in fiscal 2022. Finally, the BSE Sensex rose 1197.11 points or 2.46% to 49,797.72, while the CNX Nifty was up by 366.65 points or 2.57% to 14,647.85.

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