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Sensex, Nifty recover from budget despair as manufacturing data raise hopes

MUMBAI: Stock markets recovered from the budget blues on Monday with the benchmark index Sensex closing higher by 137 points after a survey showed manufacturing activity soared to an eight-year high on new orders.

The 30-share BSE Sensex rose by 136.78 points or 0.34 per cent to settle at 39,872.31 as 18 of its components ended with gains.

The recovery was broad as all BSE sectoral indices barring IT and Teck closed with gains.

The 50-share NSE Nifty gained 46.05 points or 0.39 per cent to close at 11,707.90.

As many as 28 Nifty stocks advanced, led by Asian Paints.

Markets had opened lower after suffering a major hit on Saturday as budget proposals failed to enthuse investors.

Sensex dropped to a low of 39,563.07 while Nifty touched a low of 11,614.50 in early trade.

Stocks turned positive in the afternoon session after a monthly survey said the country’s manufacturing sector activity climbed to a near eight-year high in January.

The IHS Markit India Manufacturing PMI rose from 52.7 in December to 55.3 in January, driven by sharp rise in new business orders amid a rebound in demand conditions that led to rise in production and hiring activity.

Asian Paints was the top gainer in the Sensex pack, rallying 6.32 per cent.Nestle India rose by 5.3 per cent, HUL by 5.06 per cent, Bajaj Auto by 4.71 per cent, IndusInd Bank by 4.29 per cent, Tata Steel by 3.06 per cent, Maruti by 2.99 per cent and PowerGrid by 2.79 per cent.

On the other hand, ITC cracked 5.09 per cent on the budget proposal to increase excise duy on cigarettes by 212-388 per cent.

IT stocks TCS, HCL Tech and Tech Mahindra too ended in the red.

Indian markets traded volatile in the first session of the week with investors assessing the implications from budget and a sell-off in China, said Narendra Solanki, Head Fundamental Research (Investment Services) – AVP Equity Research, Anand Rathi Shares & Stock Brokers.

“With budget behind, traders now shifts focus back to the quarterly earnings season and the central bank’s interest rate decision later this week,” he added.

Markets garnered support from Realty, metal, private banks, FMCG and even majority of auto stocks while PSU banks and select pharma stocks received wrath, Paras Bothra, President of Equity Research, Ashika Stock Broking said, adding that majority of high dividend-paying stocks were among gainers after the abolition of DDT.

Among sectoral indices, BSE basic materials, power, telecom, bankex, consumer durables and FMCG indices ended with gains, while IT and teck indices settled in the red.

BSE midcap and smallcap indices rose up to 1.12 per cent.

Vinod Nair, Head of Research at Geojit Financial Services said, “Market is finding some sanity after the setback of not meeting high expectations from the budget. Manufacturing PMI shows notable rebound providing a breather that economy will stabilize as mentioned in the budget.”

Meanwhile, bourses in Shanghai plunged nearly 8 per cent as markets opened after en extended Lunar New Year break.

Japan and South Korea ended in the red, while Hong Kong settled with gains.

Stock exchanges in Europe opened on a positive note. Brent crude oil futures fell 0.81 per cent to USD 56.16 per barrel. On the currency front, the Indian rupee depreciated 2 paise to close at 71.34 per US dollar (intra-day).