Nifty, Sensex rise 1% on windfall tax cut, FPI buying, easing commodity prices; ‘Use dips to buy value stocks’

Nifty, Sensex rise 1% on windfall tax cut, FPI buying, easing commodity prices; ‘Use dips to buy value stocks’

Indian equity markets surged over 1.2 per cent on Wednesday, led by gains in oil and gas firms including Reliance Industries, ONGC after the government slashed the newly-introduced windfall tax on petrol, diesel, aviation fuel, and crude oil following the easing of global oil prices after a sharp spike earlier. Benchmark BSE Sensex rose 1.3 per cent to 55,554 points while Nifty gained 1.4 percent to 16,568. The Centre has scrapped a Rs 6 per litre tax on the export of petrol completely and reduced the same on aviation turbine fuel (ATF) to Rs 4 from Rs 6 per litre. The tax on diesel has been reduced to Rs 11 from Rs 13 per litre. Tax on domestically-produced crude has been cut by 27 per cent to Rs 17,000 per tonne.

The gains in global equities after a fall in the US dollar also improved market sentiment. Overnight, Dow Jones, S&P500 and Nasdaq surged nearly 3 per cent each, while emerging markets, which include FTSE100, CAC 40 and DAX, advanced between 1-3 per cent. Asian markets were also trading higher with Japan’s Nikkei rising 2.5 per cent and Hong Kong’s Hang Seng index advaning 1.4 per cent. Additionally, commodity prices easing with crude dropping below $100 a barrel also gave a push to domestic equities.

“Benchmark index Nifty-50 rebound sharply and recovered over 9 per cent from its recent low. Major Indian Equity Indices continued the positive momentum for the fourth straight session to trade highest since 7 June 2022 ahead of the positive clue from the global markets coupled with reduction in windfall tax and cuts in duties on exports for petroleum products. Correction in the Dollar index and FPI buying also helps the market to trade in the northward direction. In benchmark index Nifty 50, 16,700 level may act as an immediate hurdle and breaching this may lead the run-up towards 17,000 in the near term, while on the downside 16,300 may act as an important support zone,” said Akhilesh Jat, Category Manager – Equity Research.

Use dips as buying opportunities

“The Indian equity markets are rallying this week where benchmark indices Nifty and Sensex have gained about 3% this week so far thanks to a slow down in FIIs selling, improved global sentiments, cool off in commodity prices, and better fundamentals of the Indian economy. Inflation is the biggest concern but it seems the worst is behind us and most of the pain is already factored in by the market while the Indian economy is showing strong resilience,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

He further added, “Technically, Nifty has bottomed out, however, 16,800-17,000 will be an immediate and critical supply zone where we can expect some profit booking. On the downside, 16300 will be the first support level while 16,000 is a sacrosanct support level. Traders/Investors are advised to use any small dip as a buying opportunity. However this thing won’t be as easy as it was last year therefore stock selection will be important.”