Key indices logged strong gains in the week marked with extreme volatility. The Budget for 2023-24 was laid down in the Parliament by the Union Finance Minister. Indices settled higher on all the five trading sessions in the week. The Nifty settled above 17,850 level. Small and mid-cap stocks underperformed the Sensex. Adani group stocks extended last week slump following US-based short-seller Hindenburg Research's adverse report on the conglomerate. The Budget for 2023-24 was laid down in the Parliament by the Union Finance Minister on 1 February 2023. Investors cheered after the central government announced a slew of measures to boost capital expenditure spending in country while simultaneously providing relief to highest taxpayers, all this coupled with reigning the fiscal deficit to below 4.5% of GDP by 2025-26. In the week ended on Friday, 3 February 2023, the S&P BSE Sensex gained 1,510.98 points or 2.55% to settle at 60,841.88. The Nifty 50 index advanced 249.70 points or 1.42% to settle at 17,854.05. The BSE Mid-Cap index rose 0.45% to settle at 24,448.01. The BSE Small-Cap index rose 0.86% to settle at 27,862.68.

Weekly Index Movement:

The benchmark indices managed to settle higher on Monday, snapping a two-day losing streak. The barometer index, the S&P BSE Sensex advanced 169.51 points or 0.29% to 59,500.41. The Nifty 50 index added 44.60 points or 0.25% to 17,648.95.

The frontline indices ended a volatile session with minor gains on Tuesday. The barometer index, the S&P BSE Sensex rose 49.49 points or 0.08% to 59,549.90. The Nifty 50 index added 13.20 points or 0.07% to 17,662.15.

The key equity indices ended a roller coaster session with tepid gains on Wednesday. The Budget for 2023-24 was laid down in the Parliament by the Union Finance Minister. The barometer index, the S&P BSE Sensex advanced 158.18 points or 0.27% to 59,708.08. The Nifty 50 index lost 45.85 points or 0.26% to 17,616.30.

The Nifty ended almost flat while the Sensex settled with decent gains on Thursday. Trading was volatile due to expiry of weekly index options on the NSE. The barometer index, the S&P BSE Sensex rose 224.16 points or 0.38% to 59,932.24. The Nifty 50 index fell 5.90 points or 0.03% to 17,610.40.

The equity benchmarks settled with sharp gains on Friday. Banks and financial services stocks rallied. On the other hand, pharma, healthcare and energy shares declined. The barometer index, the S&P BSE Sensex jumped 909.64 points or 1.52% to 60,841.88. The Nifty 50 index gained 243.65 points or 1.38% to 17,854.05.

Stocks in Spotlight:

Adani Enterprises dropped 42.65%. Adani Enterprises tanked after the company called off its Rs 20,000 crore FPO. A press release issued by the conglomerate late on Wednesday stated, "Given the unprecedented situation and the current market volatility the company aims to protect the interest of its investing community by returning the FPO proceeds and withdraws the completed transaction."

Adani Ports and Special Economic Zone slumped 16.66%. The company said that it handled approximately 27.6 MMT of total cargo in January 2023, recording a growth of 11% year on year.

Ambuja Cements declined 1.95%. With reference to the news item dated 30 January 2023 captioned "Adani Group said to plan Rs 3000 cr Ambuja, APSEZ buybacks", the cement major clarified to the stock exchanges that there was no such plan and hence, it was not in a position to comment on the veracity of said media report.

The National Stock Exchange (NSE) has put Adani Enterprises, Adani Ports & SEZ and Ambuja Cements under additional surveillance measure (ASM) framework effective 3 February 2023.

NTPC shed 0.48%. The state-run power major's consolidated net profit rose 6.18% to Rs 4,776.61 crore on 33.97% jump in revenue from operations to Rs 44,601.84 crore in Q3 FY23 over Q3 FY22.

Vedanta fell 1.74%. On consolidated basis, the mining company's net profit declined 42.25% to Rs 3,092 crore in Q3 FY23 from Rs 5,354 crore posted in Q3 FY22. Revenue from operations fell marginally to Rs 33,691 crore in Q3 FY23 as against Rs 33,697 crore reported in the corresponding quarter last year.

Larsen & Toubro (L&T) added 0.31%. The EPC major posted a consolidated net profit of Rs 2,553 crore in Q3 FY23, registering a growth of 24% from Rs 2,055 crore recorded in Q3 FY22. The conglomerate recorded revenues of Rs 46,390 crore for the quarter ended 31 December 2022, recording a YoY growth of 17%.

Tech Mahindra fell 1.76%. On a consolidated basis, the IT major's net profit rose marginally to Rs 1,296.6 crore in Q3 FY23 as against Rs 1,285.4 crore posted in Q2 FY23. Revenue from operations grew 4.61% quarter on quarter (QoQ) to Rs 13,734.6 crore in quarter ended 31 December 2022.

State Bank of India rose 0.79%. The PSU major reported 68.47% jump in standalone net profit to Rs 14,205.34 crore on a 25.18% rise in total income to Rs 98,083.77 crore in Q3 FY23 over Q3 FY22. Net Interest Income (NII) increased by 24.05% YoY to Rs 38,069 crore during the quarter. Net Interest Margin (domestic) was at 3.69% in Q3 FY23 as against 3.40% in Q3 FY22.

Titan Company gained 5.64%. The company's net profit declined 4% to Rs 951 crore on 11% rise in revenue from operations to Rs 10,444 crore in Q3 FY22. Total income for the quarter was Rs 10,651 crore, registering a growth of 12% compared with Rs 9,516 crore of Q2 FY22 (excluding bullion sale). EBIT fell 3% to Rs 1,328 crore during the quarter as against Rs 1,369 crore in corresponding quarter last year. EBIT margin stood at 12.5% in Q3 FY23 as against 14.4% in Q3 FY22.

Housing Development Finance Corporation (HDFC) rose 1.34%. The housing finance major's standalone net profit rose 13.19% to Rs 3,690.80 crore on 29.3% increased in total income to Rs 15,246.81 crore in Q3 FY23 over Q3 FY22. The net interest income (NII) for the quarter ended 31 December 2022 stood at Rs 4,840 crore compared to Rs 4,284 crore in the previous year, registering a growth of 13%. The monetary policy and interest rate actions have had a short-term impact on the net interest income (NII).

Union Budget 2023-2024:

Union finance minister Nirmala Sitharaman tabled the Economic Survey 2023 in the Parliament on 31 January 2023. The government has projected that India will remain the fastest growing major economy in the world with a GDP growth forecast of 7% in FY23 and 6-6.8% in FY24.

The Survey further highlighted that the challenge to rupee depreciation persists with the likelihood of further interest rate hikes by the US Fed. CAD may continue to widen as global commodity prices remain elevated, economic growth momentum stays strong. Rupee may come under pressure if current account deficit (CAD) widens.

Finance Minister Nirmala Sitharaman presented the Budget 2023 on 1 February 2023. This was the final full-fledged budget of the Narendra Modi government before the general election next year.

FM Sitharaman said fiscal deficit for 2023-24 is estimated at 5.9%. FY23 fiscal deficit is revised at 6.4% of GDP. FY24 gross borrowings is set at Rs 15.4 lakh crore. Sitharaman in her Budget speech said that India's FY23 GDP growth is estimated at 7%. The government is increasing capital investment outlay by 33% to Rs 10 lakh crore, which would be 3.3% of GDP. This is highest ever capital outlay by India. The government announced capital outlay of Rs 2.40 lakh crore for railways, an increase of 9x over FY14.

50 additional airports, heliports, water aerodromes, advanced landing zones will be revitalised. Cities will be incentivised to improve creditworthiness for municipal bonds. About 100 critical transport infra projects for steel, ports, fertiliser, coal, foodgrain sectors have been identified with an investment of Rs 75,000 crore including Rs 15,000 crore from private sources.

The Finance Minister has announced new income slabs bringing down the overall tax outgo for middle income earner group in FY 2023-24. Rebate limit on personal income tax increased from Rs 5 lakhs to Rs 7 lakhs. The rebate will be only for those in the new tax regime.

Macroeconomic Data:

The S&P Global India Composite PMI Output Index fell from December's near 11-year high of 59.4 to 57.5 in January. Manufacturing production increased at a stronger rate than services activity, but growth moderated in both cases.

The S&P Global India services Purchasing Managers' Index (PMI) fell to 57.2 in January as compared to 58.5 in December. It has been above the key level of 50 that separates growth from contraction for an eighteenth straight month.

The International Monetary Fund (IMF) has retained its GDP growth forecasts for India for 2022-23 and 2023-24 at 6.8% and 6.1%, respectively. Growth in India is set to decline from 6.8% in 2022-23 to 6.1% in 2023-24 before picking up to 6.8% in 2024-25, with resilient domestic demand despite external headwinds, the IMF said in an update to its World Economic Outlook report.

Global Markets:

China's factory activity in January signaled a further contraction from previous readings, albeit at a slower pace, marking the sixth monthly contraction in a row. The Caixin manufacturing Purchasing Managers' Index for January came in at 49.2 on Wednesday, a slightly higher reading than December's 49.

China's service sector showed a rebound in the first month of 2023, according to the Caixin/S&P Global services purchasing managers' index (PMI). The reading rose to 52.9 in January, from the business activity index of 48 seen in December.

Japan's factory activity logged another contraction in January, marking a third straight month of contraction. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index held steady at 48.9, below the 50-point mark separating growth from contraction.

The au Jibun Bank Japan services purchasing managers' index came in at 52.3 for the month of January, ticking higher than the previous reading of 51.1 seen in December.

The US central bank announced a quarter-point hike to the benchmark lending rate at the end of its two-day policy meeting, taking the rate to a target range of 4.50-4.75%. "Inflation has eased somewhat but remains elevated," said the Fed's policy-setting Federal Open Market Committee (FOMC) in a statement. "The committee anticipates that ongoing increases in the target range will be appropriate" to bring inflation back to policymakers' 2% target over time, the statement said.

US Federal Reserve chair Jerome Powell acknowledged that inflation was starting to ease, in remarks he made following a quarter-point rate hike by the U.S. central bank.

In Europe, the Bank of England raised interest rates by half a percentage point Thursday as it sought to tame double-digit inflation that is fueling a cost-of-living crisis, public-sector strikes and fears of recession. The bank's monetary policy committee voted 7-2 to push its key rate to 4%.