Finance Minister Nirmala Sitharaman delivered what she promised—”a Budget like never before”. The Street responded with equal enthusiasm as the bulls pushed the S&P BSE Sensex higher by over 2,300 points, Nifty50 above 14,200 levels, and NiftyBank to a record high.
The market recorded the best Budget Day percentage gains in 2 decades.
Investor wealth in terms of market capitalisation rose by over Rs 6 lakh crore in a single trading session. The average market capitalisation of the BSE-listed companies rose from Rs 186.12 lakh crore as on January 29 to Rs 192.46 lakh crore as on February 1.
Let’s look at the final tally on D-Street: the Sensex rose 2,314 points to 48,600, while the Nifty50 gained 646 points to close at 14,281.
Sectorally, the action was seen in banks, finance, realty, infrastructure, capital goods, as well as the auto index.
The S&P BSE midcap index rose more than 3 percent, while the S&P BSE smallcap index was up more than 2 percent.
Experts are of the view that the market began the day with caution but a “pro-growth” Budget without any new taxes fuelled the risk-on rally. With Nifty Bank hitting record high, the deck is clear for a rally towards fresh record highs in the coming days.
The first resistance is placed at 14,753-15,000 for the Nifty50. The momentum seen in the Budget is likely to continue for the next few days and the Nifty Bank could head towards 34,500, experts said.
“Technically, the market has created a strong bullish reversal pattern on the daily chart and is moving towards the 14500 levels. Traders should consider reducing the weak positions on the resistance or around the cost price,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities told Moneycontrol.
“The strategy would be to buy in the market if it corrects to 14200. The Nifty would move above to the level of 15300 if it crosses 14800 levels.”
Chouhan added that the Bank Nifty has cheered the sentiment and surpassed the previous high of 32,842 levels. As per the charts, it is heading for 34,500 in the next few weeks.
Here is what experts say investors should do on February 2:
Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited
The Nifty formed a strong bullish candle on a daily scale and regained more than half of the losses made in the last six sessions.
Now, it has to continue to hold above 14,200 to witness a fresh move towards 14,500 then 14,750 zones, while on the downside, major support exists at 14,000 and 13,800 levels.
Abhishek Chinchalkar, CMT Charterholder and Head of Education, FYERS
If the Nifty and the Bank Nifty sustain above 14,200 and 32,850, respectively, the bearishness we witnessed last week would be negated and the short-term bias will flip back to the upside.
In such a case, we can expect the upside to extend towards 15000 for Nifty and 34500 for Bank Nifty.
Vinod Nair, Head of Research at Geojit Financial Services
The Union Budget 2021 is a boon for the equity market, with all the essential aspects of growth supported by an increase in government spending without an increase in indirect taxes.
Proposal for the privatisation of 2 PSU banks and measures to curb the impact of NPAs helped the banking index to lead the soaring rally. Higher government spending in Infrastructure and increased FDI limit in Insurance improved the overall outlook of these sectors.
Although cess can have a marginal impact on the related sectors, the Budget provides incentives to generate wealth in the economy without providing a high burden on households and private sectors.
Ajit Mishra, VP – Research, Religare Broking Ltd
We expect this Budget rally to extend further however participants should be selective in their approach now. Going ahead, global cues and corporate earnings would also be on the radar.
The way the banking index moved on the budget day, we feel it could lead the next leg of the rally alongside infra counters.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.
The Nifty witnessed a sharp reversal on February 1 after declining for the last six consecutive sessions. The index broke out from the 20-hour moving average & a falling trendline that induced bulls for a fresh round of buying.
The Nifty went on to cross the junction of the 40-hour exponential moving average & the hourly upper Bollinger Band. This shows that the benchmark index has resumed its larger uptrend & is on the course to test its all-time high of 14753.
On the way up, 14500 will be an intermediate hurdle to watch out for. On the flip side, 14000-13900 will now act as a crucial short term support zone.
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