Nifty may target 5700 and Sensex may hit 18,800

The domestic market opened with decent gains a day after the Union Budget, as investors cheered the proposals for hiking foreign institutional investment (FII) limit and reduction in surcharge on corporate tax. Reacting to these proposals, buying by institutional investors was on the rise today. Besides, positive economic indicators and firm Asian markets also supported the rally. The key indices ended with gains of over 3.5%.

Stock markets in India will remain closed on Wednesday on account of a local holiday.

The Sensex and Nifty put up an incredible show today. The Sensex opened with a gap up of 159 points at 17,982 and the Nifty opened at 5,382, a gap up of 49 points. The market never looked back and kept rising throughout the day. Eventually, the Sensex ended up 623 points (3.5%) at 18,447 and the Nifty up 189 points (3.54%) points at 5,522. Today's gain is the biggest since 28 May 2009. The gain from the three-day rally (starting 25 February 2011) has completely covered up the loss of three days of fall from 22 to 24 February 2011.

In the past three days, both the Sensex and Nifty made higher highs and higher lows, finally leading to a massive burst today. This shows that the market rally is a strong one. The advance-decline ratio on the National Stock Exchange was a handsome 1390:330.

The market breadth on the key indices was splendid, as all 30 stocks on the Sensex and the 50-share Nifty ended in positive terrain. In the broader markets, the BSE Mid-cap index gained 3.2%, while the BSE Small-cap index advanced 2.38%.

The top sectoral gainers were BSE Auto (up 5.64%), BSE Bankex (up 4.35%), BSE Realty (up 4.20%), BSE Capital Goods (up 4.19%) and BSE Metal (up 4.13%).

Mahindra & Mahindra (up 8.36%), Maruti Suzuki (up 7.14%), Jaiprakash Associates (up 7.10%), NTPC (up 6.32%) and Hindalco Industries (up 5.78%) were the top Sensex gainers. There were no red ticks on the index today.

The seasonally adjusted HSBC Purchasing Managers' Index (PMI)-a headline index to measure the overall health of the manufacturing sector-stood at 57.9 for February, up from 56.8 in the previous month. The latest reading indicates a marked expansion of the Indian manufacturing sector, which is the strongest in three months and above the long-run series average (56.1).

Markets in Asia ended with decent gains, boosted by Chinese factory output in February and a fall in crude prices. The Purchasing Managers' Index fell to 52.2 from 52.9 in January, marking the third monthly decline, the China Federation of Logistics and Purchasing said today. The gauge of input prices climbed to 70.1, the highest level since November.

Meanwhile, crude oil for April delivery declined 0.9% to settle at $96.97 a barrel in New York on Monday, the biggest daily drop since 11th February, after Saudi Arabia offered to make up for supplies lost because of the unrest in Libya.

The Shanghai Composite gained 0.51%, the Hang Seng rose 0.25%, the Jakarta Composite surged 1.22%, the KLSE Composite advanced 0.74%, the Nikkei 225 rose 1.22%, the Straits Times jumped 1.90% and the Taiwan Weighted settled 1.49% higher. The South Korean stock market was closed today for a local holiday.

Back home, foreign institutional investors were net sellers of stocks worth Rs39.86 crore on Monday. On the other hand, domestic investors were net buyers of equities worth Rs317.38 crore.

Reacting to the finance minister's move to keep excise duty unchanged and the proposal to offer special incentives for companies manufacturing hybrid vehicles, the BSE Auto index (up 5.64%) was the top gainer today. Besides, broader measures like increased focus on rural and infrastructure spending would support long-term growth of the sector. Ashok Leyland jumped 11.46%, Bharat Forge jumped 8.74%, Mahindra & Mahindra was up 8.36%, Maruti Suzuki gained 7.14% and Tata Motors was up 5.42%.

The government will give Rs140 to the banks for every 'no-frills' account opened by them as part of its initiative to expand the reach of banking services in the country, finance minister Pranab Mukherjee proposed in the Budget yesterday. In total, the government will grant Rs50 crore to banks in the next fiscal 2011-12 for this exercise.

IndusInd Bank surged 6.26%, Yes Bank advanced 6.01%, ICICI Bank gained 5.66%, Bank of India rose 5.59% and Axis Bank was up 5.25%.

The government has proposed a full tax rebate on affordable housing projects under a notified scheme, while also raising the ceiling of 1% interest subsidy on home loans up to Rs15 lakh from the current Rs10 lakh. Among realty stocks DB Realty gained 6.57%, Sunteck Realty advanced 5.47%, HDIL rose 5.32%, Sobha Developers gained 5.06% and Indiabulls Real Estate added 4.86%.