Arun Jaitley's Budget offers tax balm, Sensex shoots up 486 points

Mumbai: A focus on fiscal discipline and clarity on FPI taxation as reflected in the Union Budget came as music to investors' ears, with the Sensex leaping nearly 486 points today to close at an over 3-month high of 28,142.

Financial and realty stocks powered the show.

Markets welcomed the budgetary proposals of infusing Rs 10,000 crore in public sector banks and keeping long-term (LTCG) and short-term capital gains tax (STCG) unchanged for the capital market.

Additionally, Finance Minister Arun Jaitley proposed that category I and II foreign portfolio investors (FPIs) should be exempted from taxation on indirect transfers, which made investors a happy lot.

Both key indices Sensex and Nifty reclaimed their key levels of 28,000 and 8,700 for the first time, scoring their biggest single-day gain since October 2016.

The Sensex, which kept moving in a tight range immediately after the Budget was presented in Parliament, started climbing and closed higher by 485.68 points, or 1.76 percent, at 28,141.64. This is its highest closing since October 24 last year when it settled at 28,179.08.

It had shot up about 504 points intra-day.

The broad-based Nifty was also on the upswing and rallied by 155.10 points, or 1.81 percent, to settle at 8,716.40 after touching the day's high of 8,722.40 and a low of 8,537.50.

The rupee firming up 40 paise to end at 67.47 -- a one and a half month high -- helped pace the gains.

"No change in long-term capital gains tax on equities has lightened investors' fears on transaction cost. The budget has given a positive momentum in the market, the focus of which was to reduce fiscal deficit to 3.2 percent of GDP in 2017-18. Infrastructure developments are welcomed by the investors," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

Meanwhile, Nikkei Markit India Manufacturing PMI in January rebounded from the demonetization downturn amid rising order books, production as well as buying levels and expansion in the sector by increasing to 50.4, from 49.6 in December.

Shares of state-run banks such as SBI, Union Bank of India, Bank of Baroda, PNB and Syndicate Bank hogged limelight and climbed by up to 5.64 percent as the government announced infusion of Rs 10,000 crore in public sector banks in the next fiscal.

The Budget also allocated a record Rs 3.96 lakh crore to the infrastructure sector. Also, the government announced infrastructure status to affordable housing to encourage investment and offered tax sops for developers sitting on completed unsold inventories, which triggered buying in realty stocks.

DLF, Godrej Properties, HDIL, Oberoi Realty, Prestige Estate Projects, Sobha Ltd and Unitech zoomed by up to 6.74 percent.

Shares of companies related to the agriculture sector such as Dhanuka Agritech and Jain Irrigation Systems ended higher by up to 3.71 percent after Jaitley announced a whopping Rs 1 lakh crore hike in credit target for the next fiscal to Rs 10 lakh crore as part of efforts to double farm income in the next five years.

Major gainers included Maruti Suzuki (4.69 percent), M&M (4.64 percent), ITC (4.51 percent), ICICI Bank (4.40 percent), GAIL (3.76 percent) and Adani Ports (3.60 percent).

The mid-cap index rose 1.77 percent and small-cap 1.68 percent.

Foreign investors sold shares worth a net Rs 532.88 crore yesterday, as per provisional numbers.

Asian shares ended mixed with upward bias while European markets were trading higher in their afternoon deals.

Sentiment turned more bullish on proposal to further liberalise FDI policy, traders said.

Overall, 18 out of 30 index-based components ended in the green while others in the red. The big gainer was Maruti Suzuki, which jumped after total sales rose 27.1 percent to 1.44 lakh units in January 2017.

The market breadth turned positive as 1,935 shares ended higher, 896 closed lower while 101 ruled steady.

The total turnover on BSE hit Rs 3,797.88 crore, higher than Rs 3,204.94 crore registered during the previous session.