The BSE Sensex jumped over 500 points on Friday on expectations that Finance Minister Arun Jaitley’s first full-year Budget will increases public investment to kick start the economy. The 50-share Nifty jumped 2 per cent above 8,850 as stock markets posted their best single-day advance in nearly six weeks.
The Railway Budget presented on Thursday increased the outlay for capital expenditure by 50 per cent, raising hopes the Saturday’s Union Budget will also boost capital expenditure, analysts said.
The government’s Economy Survey reiterated India would not overshoot its deficit target of 4.1 per cent of gross domestic product in this fiscal year. It also stood by a medium-term target of cutting it to 3 per cent of GDP. The Survey will be the basis for the 2015/16 Budget to be unveiled on Saturday.
“After having seen a pragmatic and a transformational railway Budget, the investing community was clearly encouraged by the Economic Survey. This also raises the expectations from the Union Budget due to be presented tomorrow,” said Devang Mehta of Anand Rathi Financial Services.
Stocks and sectors like infrastructure, expected to get preference in the upcoming Budget, rallied as traders put speculative bets. GMR Infrastructure surged 7.2 per cent.
Larsen & Toubro gained 4.5 per cent, its best single-day gain since June 2, 2014, after the company, along with three others, were shortlisted for a defence contract worth Rs 50,000 crore.
Other shortlisted companies also gained. Tata Power gained 5.2 per cent, Bharat Electronics added 4.8 per cent and Rolta India surged 17.7 per cent.
“I think markets are quite confident about the Budget. I think the Budget will underline the various initiatives that the government has taken and going to take, which will cheer up the economy,” said Deven Choksey, managing director, KR Choksey Securities.
The Sensex closed 473 points higher at 29,220 and the broader Nifty added 161 points or 1.85 per cent to end at 8,445.
(With inputs from Reuters)