Markets closed higher led by a smart rally in the banking shares after the Economic Survey 2016 tabled by the Finance Minister stated plans of capitalizing PSU banks along with the rights to recover money from debt ridden promoters.
The Economic Survey which unveiled a path towards fiscal consolidation and stability in inflation despite slowdown in economic growth further lifted sentiment.
The S&P BSE Sensex closed 179 points higher at 23,154 and the Nifty50 climbed 59 points to end at 7,029.
In the broader market, smallcaps did not witness buying interest with BSE Smallcap index closing 0.4% lower.
However, BSE Midcap index climbed 0.3%. The market breadth ended negative with 1,4234 declines versus 1,040 advances.
"The Economic Survey has always been a report card. The critical issues are how the government is looking at growth prospects and inflation.
There are uncertainties about the growth outlook because of global headwinds and the over indebtedness of the corporate sector," says Indranil Pan, Group Chief Economist, IDFC Bank.
ECO SURVEY 2016: HIGHLIGHTS
The economic survey projected India to grow at 8% in the coming couple of year. Going forward, the Survey said the next year is expected to be a challenging one from the fiscal point of view.
As per the road map, the centre's fiscal deficit should come down at 3.5% of country's gross domestic product in 2016-17 from 3.9% in the current financial year.
As a cheer to the common people, it stated that consumption can rise if spending from higher wages and allowances of government workers on implementation of Seventh Pay Commission and return of normal monsoon occur.
On the flipside, the survey enumerated three downside risks -- turmoil in global economy could worsen the outlook of exports, contrary to expectations oil price rise would increase the drag from consumption and the most serious risk is the combination of these two factors.
BANKS LEAD
Shares of banks surged in today’s trade with Nifty bank up 1.7% closing at 13,779 after hitting an intra-day high of 13,889.90.
Among the prominent gainers were Axis Bank, SBI, Federal Bank, Bank of Baroda, Punjab National Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank, YES Bank and ICICI Bank up between 1%-3.5%.
STOCKS IN ACTION
Shares of Housing Finance companies closed higher with Dewan Housing Finance Corp, LIC Housing Finance and Housing Development Finance Corp (HDFC) up between 1%-8%.
Coal India gained 3.5% after Suresh Prabhu yesterday in the Rail Budget announced no hike in the freight charges.
Larsen and Toubro (L&T) surged over 2% after reports stated that Larsen andToubro is upbeat by the priority given to the dedicated freight corridor project in the Rail Budget and expects the opportunity for the engineering and construction sector to be worth over Rs.2.5 lakh crore from the three new projects announced. Also, Hindustan Construction, Simplex Infrastructure gained 2% each.
UB Group companies closed higher after its chairman Vijay Mallya stepped down as non-executive chairman of United Spirits, controlled by Diageo Plc., after striking a sweetheart deal with the UK firm which agreed to drop all charges of irregularities under his watch, and pay him $75 million over five years in return for getting him to go.
United Breweries Holdings up 20%, Mangalore Chemicals and Fertilizers up 8%, United Breweries up 1% and United Spirits gained 2%.
On the other hand, Maruti Suzuki dipped 0.5% extending its month-long fall on the bourses. Thus far in February, the stock has underperformed the market by falling 18% from Rs 4,097 on January 29, as compared to 8% decline in the S&P BSE Sensex.
Weakness was seen across the board in the auto pack with Bajaj Auto, Hero Motocorp, Eicher Motors and Ashok Leyland down between 0.5%-4%.
GLOBAL MARKETS
Asian equities closed the day on a higher note as investors remain optimistic ahead of the G20 summit.
G20 finance ministers and central bankers have gathered in Shanghai for a summit to discuss global economic growth concerns.
Japan extended its rally and closed 0.3% up while Hang Seng and Shnaghai Composite added 2.5% and 1% respectively.
The positive momentum spread across the European markets. FTSE 100, DAX and CAC 40 have gained 1%-2.5% at 3:30 pm Indian Standard Time (IST).
