Sensex and Nifty50’s post-budget rally fizzles out as Adani Group stocks witness a rout

• India’s benchmark indices lost most of the gains made during the day due to drag in Adani Group stocks and investors awaited the policy decision by the US Fed later today.
• After the budget speech Sensex had surged over 1,180 points while Nifty50 rallied nearly 300 points.
• In the last half hour of the session, Sensex ended with gains of just 158 points or 0.27% at 59,708 while Nifty50 slipped 45 points or 0.26% lower at 17,616.
• Adani Group companies were dragged down after reports said that investment banker Credit Suisse has stopped accepting bonds of the group as collateral for margin loans.

India’s benchmark indices lost most of the gains made during the day due to drag in Adani Group stocks and investors awaited the policy decision by the US Fed later today.

After the budget speech Sensex had surged over 1,180 points while Nifty50 rallied nearly 300 points. However, in the last half an hour of the session, Sensex ended with gains of just 158 points or 0.27% at 59,708 while Nifty50 slipped 45 points or 0.26% lower at 17,616.

“It was no different on the Budget day as markets once again were extremely volatile and Sensex gyrated nearly 2,000 points intra-day. However, at one point during the Budget presentation, benchmark index had vaulted neary 1200 points but a rout in the Adani group stocks and nervousness ahead of the important Federal Reserve meet on interest rate punctured the rally and saw the index end mixed,” said Shrikant Chouhan, head of equity research (retail) at Kotak Securities.

Indices lost most of the gains made during the day due to a sharp fall in Adani Group stocks. Moreover, the US Fed’s rate hike decision also loomed large, but markets have factored in an interest rate hike of 25 basis points to 4.75% by the US central bank.

"A well-tuned budget with strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting,” said Vinod Nair, head of research at Geojit Financial Services.

“Life insurance players witnessed heavy selling as the budget pushed for the new tax regime, making insurance products less appealing as a tax-saving tool,” he added.

Top gainers and losers on the Nifty50 index

Top gainers	Change	Top losers	Change
ICICI Bank	2.18%	Adani Enterprises	-26.70%
JSW Steel	2.09%	Adani Ports & SEZ	-17.73%
ITC	2.06%	HDFC Life Insurance	-10.79%
Tata Steel	1.96%	SBI Life Insurance	-8.61%
Britannia Industries	1.68%	Bajaj Finserv	-5.45%

Source: NSE on February 1, 2023

In the last half an hour of the trade most sectoral indices lost their gains and trended in the red amid fiasco in Adani stocks.

Sectoral Indices	% change
Nifty PSU Bank	-5.68%
Nifty Metal	-4.50%
Nifty Media	-2.70%
Nifty Realty	-0.94%
Nifty Auto	-0.88%
Nifty Bank	-0.35%
Nifty Pvt Bank	-0.09%
Nifty Fin Service	-0.06%
Nifty Pharma	-0.04%
Nifty IT	0.93%
Nifty FMCG	1.13%

Adani Group companies were dragged down after reports said that investment banker Credit Suisse has stopped accepting bonds of the group as collateral for margin loans.

According to a Bloomberg report, the Swiss lender’s private banking arm has assigned a zero lending value for notes sold by Adani Ports and SEZ, Adani Green Energy, and Adani Electricity Mumbai.

This led to a huge slump in Adani stocks with the flagship company Adani Enterprises tumbling nearly 27% followed by Adani Ports & SEZ dropping nearly 18%.

This comes just a week after a report by New York-based Hindenburg Research alleged that Gautam Adani-led group engaged in stock manipulation and accounting fraud. The Adani group refuted these allegations, terming them “unsubstantiated allegations and misleading narrative”.

Company	% change
Adani Enterprises	-26.70%
Adani Ports & SEZ	-17.73%
Ambuja Cement	-16.50%
Adani Total Gas	-10%
ACC	-5.60%
Adani Green Energy	-5.19%
Adani Wilmar	-5%
Adani Power	-4.98%
Adani Transmission	-0.79%

The rout in Adani Group stocks has also led to a sharp fall in the wealth of Gautam Adani, who went from being the third richest person in the world to the 11th richest in one week. As a result, Mukesh Ambani has once again overtaken Adani, as the richest Indian, according to the Forbes Real-time Billionaires list.

Budget 2023 to boost growth and demand, say analysts
According to ICICI Securities, tax exemptions under the new regime will provide increased disposable income in the hands of salaried consumers, which will help boost demand.

Finance minister Nirmala Sitharaman has proposed a capital expenditure layout of ₹10 lakh crore for FY 2023- 2024, from ₹7.5 lakh crore last year.

“In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on infrastructure and agriculture which in our view would have a force multiplier impact on the economy,” said S Ranganathan, head of research at LKP Securities.

Analysts believe capital increase in investment outlay to ₹10 lakh crore from ₹7.5 lakh crore last year is a big positive for overall economy.

“The outlay for railways at ₹2.4 lakh crores is the highest ever and 9x from FY14. This shows the government intent to build infrastructure, with focus on both urban and rural areas. We believe that infra, cement, steel sector stocks should benefit in the foreseeable future,” said Manish Chowdhury, head of research at Stoxbox.

$NIFTY50.NSE Volume Point of Control shows major hurdle at 18140 (fut) levels where big players distributed or sold earlier

— (@kyalashish) February 01, 2023]]>

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