Synopsis
India’s benchmark indices advanced 1.2% to a two-week high on Wednesday, mirroring strength in global markets. A slowdown in foreign fund selling in the past two days also helped equities extend gains for a second straight day as investors took the spike in bond yields triggered by the Budget announcement of higher-than-expected capex outlay for FY23 in their stride.

Mumbai: India’s benchmark indices advanced 1.2% to a two-week high on Wednesday, mirroring strength in global markets. A slowdown in foreign fund selling in the past two days also helped equities extend gains for a second straight day as investors took the spike in bond yields triggered by the Budget announcement of higher-than-expected capex outlay for FY23 in their stride.

The Sensex ended 695.76 points or 1.18% higher at 59,558.33 while the Nifty ended up 203.15 points or 1.16% at 17,780. The volatility index cooled off further, ending down 6.6% at 18.65. Banks led the upsides with the Bank Nifty index jumping 2.1%. Analysts said further advance in shares of lenders could push up the Nifty back to its record levels.

“There is a breakout in the Bank Nifty and there is resistance on the Nifty at around 18,200. The breakout in the Bank Nifty can take the Nifty higher,” said Siddarth Bhamre, director, alternative investments and research, InCred Equities.

Asian and European markets firmed up on Wednesday, tracking the overnight up-move on Wall Street. Global markets have bounced back this week following the recent sell-off as they were oversold. Analysts said inflationary pressures and geopolitical risks continue to linger in the background.

Foreign Portfolio Investors sold Indian shares worth ₹183.6 crore after around ₹22 crore worth of selling on Tuesday, while Domestic Institutional Investors bought shares worth ₹426 crore on Wednesday. Though they remained net sellers in the past two days, the pace of outflow has slowed. Wednesday was the 15th day FPIs were net sellers. Prior to the budget, FPIs on an average sold ₹3,000 crore worth of shares in cash market daily for 13 sessions.

Indices had gained 1.5% on Tuesday after the Union Budget for financial year 2022-23 stepped up the capital expenditure sharply by 35.4% to ₹7.5 lakh crore. Nomura is of the view that the cautious mix of off-balance sheet support to smaller firms and targeted budgetary support for weaker segments was essential due to uneven recovery in growth, and the FY23 budget is a continuation of this theme. The budget provides fiscal consolidation in spirit but focuses on growth in intent, said Nomura.

After falling over 5% in the last two weeks of January due to worries around US interest rates, domestic stock indices have trimmed recent losses with two straight sessions of gains and are now just 4% away from the record highs hit in October.

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