Value buying pushes Nifty to the 5500-mark

Indian equity benchmarks continues their upward march with the Nifty testing the 5500 level, an important psychological level, on the back of value buying in most of the beaten down shares. Auto, financial, infrastructure, oil & gas and metal were on the buyers' radar with thier respective indices up 2% to 5%, adding more than 500 points on the Sensex at 13:58 hours.

Solid growth in auto sales numbers showed that the growth momentum is still on the upward path. Consensus on the street was that the budget 2011 was neutral to positive as there were low expectations. Ridham Desai of Morgan Stanley said budget was okay, there was nothing bad in the budget.

"I think there is a sigh of relief that there is nothing untoward in the budget. He (FM) has done a decent balancing act. There were a lot of constituencies to serve."

Ridham Desai, Managing Director, Morgan Stanley said that the government's move to allow global investors in mutual funds is very positive. Expressing his views on the budget, Desai noted that infra spending going up 27% is a big positive booster. He is expecting positive impact of 50-60 bps on earnings. However, he is little concerned on the revenue and subsidy numbers.

Specifically on the market, Desai said that an upside of 20% is expected on the indices. He has turned neutral from underweight on banks as he thinks valuations of banks and NBFCs are very good.

The budget 2011 was focused mainly on country's growth, boost to infrastructure, reduction in fiscal deficit, increase in foreign inflow and spending on better education for rising young population. It seems that the markets cheered this budget by pushing up the Nifty 170 points to 5,503.