 "Stock markets, Indian markets")
Benchmark indices gained for a fourth consecutive day on Friday, rebounding nearly 3 per cent from their seven-month lows, buoyed up by optimism that the Union Budget 2025-26 (FY26) will include measures to spur economic growth.
The Nifty 50 index, which had closed below 23,000 for the first time since June 7 on Monday, ended the week at 23,508, gaining 1.1 per cent on Friday. Similarly, the Sensex, which had ended at 75,366 on Monday, closed the week at 77,501. Both indices posted gains of over 1.7 per cent for the week, marking their best weekly performance in nearly two months. Despite this recent rebound, both the Nifty and the Sensex still ended the month with minor losses.
For the Nifty, this was the fourth consecutive monthly decline and the most prolonged continuous monthly fall in 23 years. In the past four months, the Nifty declined by 9 per cent.
Investors are also hoping that the Union Budget on Saturday will include measures to support growth. India’s equity markets will be open for trading on Saturday. The Economic Survey released on Friday estimates India’s gross domestic product to grow by 6.4 per cent in the current financial year, indicating a challenging growth environment.
“The indices are fuelled by expectations of a pro-growth Budget. Positive global cues and better-than-expected results from major companies also contributed to the upward trend. The market expects reductions in individual taxes and job generation to boost consumption. By cutting fiscal deficit but continuing to boost infrastructure spending, the government may set the tone for a potential recovery in the consolidating market,” said Vinod Nair, head of research at Geojit Financial Services.
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“Given the current backdrop of worried equity markets, weakening consumption impulse, and sluggish government capital expenditure (capex), the FY26 Union Budget can potentially be more than a regular annual exercise,” added a note by Motilal Oswal.
“We believe that any allocation above Rs 11 trillion for capex, backed by convincing commentary, could positively surprise the market,” it added.
Since September, domestic equities have been on a downward spiral as a slowdown in economic and corporate earnings growth has made India's premium valuations appear unsustainable. Also, rising US bond yields and a strengthening US dollar have triggered a sharp reversal in foreign portfolio investor (FPI) flows.
Friday’s gains were driven by heavyweights Larsen & Toubro (L&T), ITC, and Reliance Industries (RIL). L&T rose by 4.3 per cent after its order book reached an all-time high of Rs 5.64 trillion at the end of December. New orders secured during the quarter were the highest-ever at Rs 1.16 trillion, up 53 per cent from a year ago.
ITC, which rose 2.5 per cent, and RIL, which rose 0.9 per cent, were the other big contributors to Sensex gains.
The market breadth was strong, with 2,664 stocks advancing and 1,275 declining. On Friday, FPIs were net sellers of Rs 1,189 crore, according to provisional data from exchanges. In January, FPIs were net sellers of Rs 73,865 crore.
