Indian equity benchmarks gave a thumbs up to the Union Budget on Tuesday, ending the session on a positive note for the second straight session. Markets made gap-up opening, as traders took encouragement with newly appointed Chief Economic Advisor (CEA) V Anantha Nageswaran's statement that abatement of the COVID-19 pandemic would kick in virtuous cycle investment leading to job creation. He also said the government has taken various steps to support lower income categories. Markets gained traction in late morning session after Finance Minister Nirmala Sitharaman unveiled a Budget that aims to boost growth amid continued disruption from Covid-19 and rising inflation. Sitharaman unveiled a bigger Rs 39.45 lakh crore Budget, with higher spending on highways to affordable housing with a view to fire up the key engines of the economy to sustain a world-beating recovery from the pandemic. Her Budget for the fiscal year beginning April 2022 proposed a massive 35 per cent jump in capital expenditure to Rs 7.5 lakh crore, coupled with the rationalisation of customs duty, an extension of time for setting up new manufacturing companies and plans for starting a digital currency and tax crypto assets. However, markets witnessed a fair bit of volatility post the Budget speech. Traders turned cautious after Indian manufacturing activity fell in the month of January, but stayed above the 50 mark that separates growth from contraction. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 54.0 in January from 55.5 in December.  Some concern also came with the data released by the Controller General of Accounts showed that the Centre's fiscal deficit rose to 50.4 percent of the FY22 target in April-December 2021, with a huge increase seen in tax collections as well as capital expenditure for the month of December 2021. However, markets rebounded sharply to end higher, taking support from data showing that GST collection in January crossed Rs 1.38 lakh crore in January, a growth of 15 per cent over the year-ago period.  Some support also came with data showing that the growth of eight core infrastructure industries grew 3.8 percent in December 2021 as against 0.4 percent contraction in same month last year, on better show by coal, cement and refinery products. Finally, the BSE Sensex rose 848.40 points or 1.46% to 58,862.57 and the CNX Nifty was up by 237.00 points or 1.37% to 17,576.85.

The US markets ended higher for third straight day on Tuesday as traders continued to pick up stocks at relatively reduced levels following a disappointing January. January's sell-off came as the Fed signaled its readiness to tighten monetary policy. Those moves include raising interest rates multiple times this year, to tame inflation that has shot up to the highest level in nearly four decades, and reducing its balance sheet. A positive reaction to the latest earnings news also contributed to the continued advance, with shares of UPS (UPS) soaring after the delivery giant reported better than expected fourth quarter results, provided upbeat guidance and raised its dividend. Energy giant ExxonMobil (XOM) also showed a strong move to the upside after reporting fourth quarter earnings that beat street estimates and announcing a new $10 billion share repurchase program. On the economic data front, growth in US manufacturing activity continued to slow in the month of January, the Institute for Supply Management (ISM) revealed in a report. The ISM said its manufacturing PMI fell to 57.6 in January from a revised 58.8 in December, although a reading above 50 still indicates growth in the sector. The index decreased for the third straight month, slipping to its lowest level in over a year. Street had expected the manufacturing PMI to drop to 57.5 from the 58.7 originally reported for the previous month. Meanwhile, the Commerce Department released a report showing US construction spending increased by less than expected in the month of December. The Commerce Department said construction spending inched up by 0.2 percent to an annual rate of $1.640 trillion in December after climbing by 0.6 percent to a revised rate of $1.637 trillion in November.

Crude oil futures ended marginally higher on Tuesday with traders largely making cautious moves ahead of the meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+. OPEC+, which is scheduled to meet on Wednesday, is expected to agree to stick to the plan of increasing production by 400,000 barrels per day in March. However, there is some speculation that the group might decide to increase production by more than the 400,000 barrels per day. Meanwhile, US crude production rose 2% in November to 11.753 million barrels per day, according to a monthly report from the US Energy Information Administration. Benchmark crude oil futures for March delivery added $0.05 or about 0.06 percent to settle at $88.20 a barrel on the New York Mercantile Exchange. However, Brent crude for April delivery lost $0.10 or 0.11 percent to settle at $89.16 a barrel on London's Intercontinental Exchange.

Indian rupee ended weaker against dollar on Tuesday on the back of higher-than-expected borrowing in the next financial year. Investors were cautious after Finance Minister Nirmala Sitharaman said that the government will borrow about Rs 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement. Further, the govt said fiscal deficit in 2021-22 will be 6.9 per cent of GDP and 6.4 per cent in 2022-23, and this also weighed on sentiments. Traders were also worried as Indian manufacturing activity fell in the month of January, but stayed above the 50 mark that separates growth from contraction. As per the survey report, the Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 54.0 in January from 55.5 in December. On the global front, sterling rose for a third straight session to a week-high against the dollar on Tuesday as investors speculated the Bank of England could go beyond announcing another interest rate hike this week and set the path for further monetary tightening. Finally, the rupee ended 74.82, weaker by 17 paise from its previous close of 74.65 on Monday.

The FIIs as per Tuesday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 8311.82 crore against gross selling of Rs 10349.00 crore, while in the debt segment, the gross purchase was of Rs 206.01 crore against gross selling of Rs 524.10 crore. Besides, in the hybrid segment, the gross buying was of Rs 9.54 crore against gross selling of Rs 20.24 crore.

The US markets ended higher on Tuesday as Exxon's strong financial results sent the energy index to a multi-year peak. Japan market is trading in green on Wednesday following strength in Wall Street indices. Indian markets jumped around 1.5 percent on February 1 as investors cheered the Finance Minister's Union Budget announcements. Today, benchmarks are likely to start the session on a positive note tracking firm global cues. Traders will be getting encouragement as Chief Economic Adviser V Anantha Nageswaran expressed hope that India would become a $5 trillion economy by FY26 or the next year on the back of 8-9 per cent sustained growth. He added gross domestic product (GDP) in dollar terms has already crossed $3 trillion. Some support will also come as provisional data of the commerce ministry showed that the country's exports rose by 23.69 per cent to $34.06 billion in January on healthy performance by engineering, petroleum and gems and jewellery segments even as trade deficit widened to $17.94 billion during the month. Traders may take note of report that Commerce and industry minister Piyush Goyal said his ministry is in talks with the finance ministry to allow firms in the special economic zones (SEZs) to sell goods in the domestic market by paying just an equalisation levy. However, some cautiousness may come as rating agency Moody's said the Union Budget lacks any tangible measures to increase revenue generation even though the capital expenditure plans have gone up significantly and the fiscal deficit estimate suggests that the government is relying too much on strong growth to help drive fiscal consolidation. Aviation industry stocks will be in focus as Jet fuel price rose to record levels across the country following a steep 8.5 per cent hike necessitated due to a spike in international oil prices. There will be some reaction in power stocks as the power ministry data showed that India's power consumption grew marginally at 2.6 per cent year-on-year in January to 112.67 billion units (BU), showing the impact of local restrictions imposed by states amid the third wave of COVID-19. Power consumption in the entire January last year was 109.76 BU, which was 4.4 per cent higher than 105.15 BU in January 2020.

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

Nifty Top volumes

• IOC has reported 52.63% rise in its consolidated net profit at Rs 6,261.40 crore for Q3FY22 as compared to Rs 4,102.37 crore for Q3FY21. 
• Reliance Brands, part of India's largest private sector company Reliance Industries, has partnered with Rahul Mishra. 
• Sun Pharma has reported 11.14% rise in its consolidated net profit at Rs 2058.80 crore for Q3FY22 as compared to Rs 1852.48 crore for Q3FY21. 
• NTPC's subsidiary -- NTPC Vidyut Vyapar Nigam has acquired a five per cent equity stake in Power Exchange of India.