Breaking the six-day losing streak, Indian equity benchmarks registered their biggest Budget day gains in absolute terms on Monday, settling around 5 percent higher each, as investors welcomed the big infrastructure and healthcare boost provided in the Union Budget. In the budget speech, Finance Minister Nirmala Sitharaman has touched almost all the big sectors and gives something good to all the sectors. Meanwhile, the FM announced capital expenditure of Rs 5.54 trillion for FY22 as against Rs 4.39 trillion for FY21. Further, she announced the FY22 disinvestment target at Rs 1.75 trillion while the FY21 fiscal deficit was pegged at 9.5 per cent of GDP. The Budget 2021 is further expected to boost India's economic recovery in view of the significantly higher spending on growth-oriented sectors like infrastructure and local manufacturing. Markets made positive start, as sentiments got a boost with the Finance Ministry's statement that GST collections for January touched an all-time high of about Rs 1.20 lakh crore. Traders also some encouragement with report that retail inflation for industrial workers eased to 3.67 percent in December 2020 against 9.63 percent in the same month of last year due to lower prices of certain food items. Some support also came with Health Minister Harsh Vardhan's statement that India was able to fight the COVID-19 pandemic much better than other countries because of its 'whole of government' and whole of society approach. Benchmarks indices continued their upward rally in late afternoon session, as Indian manufacturing industry started 2021 with strong growth, as sustained sales growth supported a further upturn in manufacturing sector output in January. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 57.7 in January as against 56.4 in December.  Traders overlooked data showing that the output of eight core infrastructure sectors contracted for the third month in a row by 1.3 percent in December, dragged down by poor show by crude oil, natural gas, refinery products, fertiliser, steel and cement sectors. Finally, the BSE Sensex rose 2314.84 points or 5.00% to 48,600.61, while the CNX Nifty was up by 646.60 points or 4.74% to 14,281.20.

The US markets ended higher on Monday as traders looked to pick up stocks at somewhat reduced levels.  Traders continued to keep an eye on heavily-shorted stocks like GameStop and AMC Entertainment, which have seen considerable volatility amid speculative trading by retail investors. The markets largely shrugged off a report from the Institute for Supply Management (ISM) showing the pace of growth in US manufacturing activity slowed more than expected in January. The ISM said its manufacturing PMI declined to 58.7 in January from a downwardly revised 60.5 in December. While a reading above 50 indicates continued growth in the manufacturing sector, Street had expected the index to show a more modest drop to 60.0. Meanwhile, partly reflecting a spike in spending on residential construction, the Commerce Department released a report showing US construction spending increased by slightly more than expected in the month of December. The Commerce Department said construction spending jumped by 1.0 percent to an annual rate of $1.490 trillion in December after surging up by 1.1 percent to a rate of $1.476 billion in November. Street had expected construction spending to climb by 0.9 percent. Spending on private construction increased by 1.2 percent to a rate of $1.138 trillion, as a 3.1 percent spike in spending on residential construction more than offset a 1.7 percent slump in spending on non-residential construction.

Crude oil futures ended higher on Monday amid optimism about vaccination rollout picking up pace and as the Organization of the Petroleum Exporting Countries and its allies' production cut agreement became effective. Saudi Arabia's unilateral move to cut crude output by 1 million barrels per day contributed as well to the jump in oil prices. Crude oil futures for March rose $1.35 or 2.6 percent to settle at $53.55 barrel on the New York Mercantile Exchange. March Brent crude gained $1.43 or 2.6 percent to settle at $56.45 a barrel on London's Intercontinental Exchange.

Indian rupee depreciated against dollar on Monday, as government estimates fiscal deficit of 6.8 per cent of the gross domestic product (GDP) in the next financial year beginning April 1. The fiscal deficit in 2020-21 is estimated to soar up to 9.5 per cent due to rise in expenditure on account of the outbreak of COVID-19 and moderation in revenue during this fiscal year.. However, downfall remain capped as Indian manufacturing industry started 2021 with strong growth, as sustained sales growth supported a further upturn in manufacturing sector output in January. On the global front, pound rose back towards its recent three-year high on Monday, boosted by a combination of heightened global risk appetite and optimism about the UK's vaccine rollout. Finally, the rupee ended at 73.02, 6 paise weaker from its previous close of 72.96 on Friday.

The FIIs as per Monday's data were net seller in both equity and debt segment. In equity segment, the gross buying was of Rs 14605.17 crore against gross selling of Rs 18949.40 crore, while in the debt segment, the gross purchase was of Rs 809.25 crore with gross sales of Rs 997.17 crore. Besides, in the hybrid segment, the gross buying was of Rs 6.93 crore against gross selling of Rs 9.89 crore.

The US markets ended higher on Monday as a shift in the retail trading frenzy to silver drove up mining stocks and investors monitored progress in talks over economic stimulus. Asian markets are trading in green on Tuesday as global markets faced another chaotic week, with retail investors expanding their duel with Wall Street into commodities and driving up the price of silver. Indian markets ended higher with notable gains on Monday as Dalal Street cheered Budget 2021 announcements made by Finance Minister Nirmala Sitharaman in Parliament. Gains in the domestic indices were mainly led by banking, financial and auto stocks. Today, the markets are likely to continue their rally with positive start tracking firm global cues. Traders will be taking encouragement with a private report stating that the increase in healthcare outlay in the latest annual budget will lead India towards a healthier country and the thrust on infrastructure will boost growth and generate jobs. Some support will also come as foreign institutional investors (FIIs) turned net buyers in Indian markets after a five-day hiatus. FIIs net bought shares worth Rs 1,494.23 crore while domestic institutional investors net sold shares worth Rs 90.46 crore. However, Moody's Investors Service, while silent on the sovereign rating on the higher-than-expected fiscal deficit numbers, expressed doubts over attaining the higher revenue targets and divestment realisation as assumed in the Budget. It said the fiscal deficit target of 6.8 per cent for 2021-22 tries to strike a balance between supporting growth and a modest deficit reduction, but improvements in tax compliance and monetisation targets may be difficult to achieve. Besides, Finance Minister Nirmala Sitharaman announced a divestment target of Rs 1.75 lakh crore for FY'22 in her Budget speech on Monday. The target includes divestment of two state-owned banks and one insurance company, however, it is not clear whether proceeds from this are included as part of 1.75 lakh crore. Meanwhile, the government on Monday said capital market watchdog Securities and Exchange Board of India (Sebi) will be the designated regulator for gold exchanges, which will infuse transparency in gold transactions. Insurance sector stocks will be in focus after the Government paved the wave for a higher inflow of capital in the insurance sector. Finance Minister Nirmala Sitharaman, presenting the Union Budget 2021, proposed increasing the Foreign Direct Investment (FDI) limit in the insurance sector to 74 percent from the current 49 percent. Auto stocks will be in limelight reacting to their monthly sales numbers.

Support and Resistance: NSE (Nifty) and BSE (Sensex)

Nifty Top volumes

• Tata Motors has launched a limited edition trim of its entry level hatchback Tiago priced at Rs 5.79 lakh (ex-showroom Delhi). 
• IOC is planning to expand its Chennai refinery at a cost of Rs 31,500 crore through a JV with its subsidiary and strategic financial investors. 
• Dr. Reddy's Laboratories has expected Russia's COVID-19 vaccine Sputnik V to be launched in India through EUA by March this year. 
• Cipla has reported 2-fold jump in its consolidated net profit attributed to the shareholders at Rs 748.15 crore for Q3FY21 as compared to net profit at Rs 351.03 crore for Q3FY20.