Markets end higher, thanks to windfall tax cut; Sensex gains over 560 pts, Nifty over 18,050
3 min read . Updated: 17 Jan 2023, 04:50 PM IST
Premium- In terms of sectoral indices, capital goods stocks were the best performers, while FMCG, industrial, utilities, power, realty, and oil & gas stocks also contributed to the upside substantially.
Sensex and Nifty 50 gained by 1% each on Tuesday after the Centre lowered the windfall tax on crude oil that led to a strong rally in refiners especially heavyweight Reliance Industries. Markets made their biggest single-day gains after volatile five sessions. India's volatility index dropped nearly 3%. However, extensive foreign funds outflow continues to remain a matter of concern. Meanwhile, the Indian rupee extended its fall against the US dollar.
Sensex rose by 562.75 points or 0.94% to settle at 60,655.72. While Nifty 50 jumped by 158.45 points or 0.89% to end at 18,053.30. In the trading session, Sensex and Nifty 50 touched an intraday high of 60,704.48 and 18,072.05.
In terms of sectoral indices, capital goods stocks were the best performers, while FMCG, industrial, utilities, power, realty, and oil & gas stocks also contributed to the upside substantially.
On Monday, the Indian government slashed the windfall tax on locally-produced crude oil to ₹1,900 per tonne from ₹2,100 per tonne after a gap of two weeks. Also, the Centre has reduced additional excise duty on the export of aviation turbine fuel (ATF) to ₹3.5 per litre from earlier ₹4.5 per litre and has reduced export duty on diesel to ₹5 per litre, including cess, from the previous levy of ₹6.5 per litre.
BSE Oil & Gas closed at 20,767.92 up by 175.58 points or 0.85% on Tuesday. Adani Total Gas was the top gainer with over 4% upside followed by heavyweight RIL which gained around 1.4%. Indraprastha Gas, GAIL, Petronet LNG, and ONGC were also in green.
Broadly, top gainers on BSE Sensex were L&T, HUL, HDFC, HCL Tech, HDFC Bank, RIL, TCS, Power Grid, Ultratech Cement, Tech Mahindra, NTPC and Maruti Suzuki with upsurge ranging from 1-3.5%.
On the other hand, stocks like SBI, Bajaj Finserv, IndusInd Bank, Wipro, Tata Steel, and Bajaj Finance were among the top bears.
Vinod Nair, Head of Research at Geojit Financial Services said, "The domestic market is attempting to gain, in comparison to its weak YTD performance, which was caused in anticipation of a soft Q3 result & union budget. We started the third quarter results on a shaky note, but the latest set of financial announcements from IT and banking blue chips are encouraging. Heavy weights are also pushing the counter, including the fact of the fall in windfall tax."
Meanwhile, Ajit Mishra, VP - of Technical Research, Religare Broking added that recovery in the energy and FMCG majors kept the participants busy while others traded mixed. The broader indices maintained the subdued tone and ended almost unchanged.
However, the current mood dampener for markets would be consistent foreign funds outflow. FIIs are net sellers for the 11th consecutive day in January so far. While they have been continuously pulling out money from Indian equities since December 23.
So far between January 1st to 16th, FIIs outflow in Indian stocks is currently around ₹18,169.67 crore.
At the interbank forex market, the rupee declined to end at 81.76 against the US dollar compared to the previous day's print of 81.6125 per dollar. The local unit was under pressure on the back of feeble Asian peers, dwindling upside momentum, and buying in the greenback. Last week, the rupee gained by 1.7% against the greenback.
Going ahead, Nair said, given the positive undercurrents, the trend should continue in the short term. However, a lot will depend on the second line of Q3 results, the budget outcome, and the Fed policy statement.
On Nifty 50, Rupak De, Senior Technical Analyst at LKP Securities said, on the daily chart, the benchmark Nifty has given a falling wedge breakout, suggesting a rise in optimism. The RSI momentum indicator has indicated a falling trendline breakout. The current technical setup suggests near-term strength, which may take the Nifty towards 18250–18270. On the lower end, support is visible at 17850.
Religare's expert added, "The bulls are trying hard to cap the damage amid the prevailing consolidation phase and awaiting some trigger for further recovery. We feel buying in select index majors may result in some respite ahead but not enough to trigger the next directional move. We thus reiterate our view to focus on stock selection and risk management until we see some decisive signal."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
