Indices trade higher ahead of Budget 2022; analysts decode factors propelling domestic market

Domestic equity markets surged nearly 2 per cent in the afternoon trade on Monday, a day ahead of the Union Budget 2022. The broader Nifty 50 and the Sensex touched day's high of 17, 410 and 58, 257.63 anticipating good provisioning in the Union Budget, positive global and domestic cues and buoyed by IT shares. All broader market indices turned green, while Nifty IT and Nifty Realty led the sectoral indices with 25 to 3 per cent gains around 1.55 pm. Below are the major factors traiggering a rally in the market a day before the Union Budget 2022. 

Budget anticipation 

The Sensex generated a gap today and has surged 1000 points on budget anticipation. "The market is looking up to Fertilizer policy, software export, reimbursement for COVID-related industries etc," said Ravi Singhal, Vice Chairman at GCL Securities.  

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Economic Survey: The central government's debt is expected to decline going forward, mentioned Economic Survey 2022. Union Finance Minister Nirmala Sitharaman tabled the survey in the Parliament on Monday. " Central government debt has gone up from 49.1% of GDP in 2019-20 to 59.3% of GDP in 2020-21, and now with the recovery of the economy, it is expected to decline," it said. The Economic Survey is an annual report card on the health of the economy which examines the performance of every sector and suggests future guidance. 

Global markets: 

Asian markets were trading in the green in the afternoon trade as Japanese Nikkei 225 and Hang Seng Index at the Hong Kong Exchange traded higher by 1.07% each. SGX Nifty Futures traded higher by 313 points or surged by 1.83% to 17,405 on the Singaporean Exchange at 1.55pm. Earlier, in a make-or-break session, the US markets returned to winning streak as the major indices gained between 1.65% to over 3 per cent, setting tempo for the week ahead.  

"In the US markets, Friday's session was make or break one after 4 days of extreme volatility. Friday's session was important for creating a base to launch a further upscale. It's clear-cut mandate that the US market is headed for an up move now as Nasdaq has already corrected 17 to 18 per cent from its all-time high," said Zee Business Managing Editor Anil Singhvi.  

Manufacturing sentiment 

Manufacturing sentiment improved sharply in Q3 (October-December 2021-22) after a brief resurgence in the first half of 2021-22, according to a study by industry association Ficci. " Apparel Export Promotion Council (AEPC) Chairman Narendra Goenka stated that the Council is looking at new markets such as Latin America, Australia, and Israel to help boost the country's apparel exports, which are expected to grow strongly this fiscal year and in 2022-23, despite rising raw material prices," said Gaurav Garg, Head of Research, Capitalvia Global Research Ltd.  

Other factors 

India's exports of ready-to-eat (RTE), ready-to-cook (RTC), and ready-to-serve (RTS) food goods totaled $2.14 billion in 2020-21. In April-October 2021-22, it was $1 billion, up from $823 million in April-October 2020-21. Bharti Airtel has agreed to buy a 25% share in Lavelle Networks, a Bengaluru-based technology business.