Stock markets recovered from the budget blues on February 3, when the Sensex benchmark closed 137 points higher after a survey found that manufacturing activity on new orders rose to an eight-year high.
BSE Sensex's 30-share stock rose 136.78 points, or 0.34%, to 39,872.31 when 18 of its components ended in earnings. The recovery was broad as all BSE industry indices, except IT and Teck, grew.
The 50-share NSE Nifty rose 46.05 points, or 0.39%, to close at 11,707.90. Up to 28 Nifty stocks rose, led by Asian Paints.
The markets opened down after a heavy blow on February 1 as budget proposals did not inspire investors. Sensex fell to a low of 39,563.07, while Nifty hit a low of 11,614.50 in early trading.
The stocks performed well in the afternoon, after a monthly survey found that manufacturing activity in the country rose to almost an eight-year high in January.
IHS Markit India's manufacturing PMI rose from 52.7 in December to 55.3 in January, reflecting a sharp increase in orders as a result of a recovery in demand, which led to an increase in manufacturing and hiring activities.
Asian Paints was the leader in the Sensex package with an increase of 6.32%. Nestle India rose 5.3%, HUL 5.06%, Bajaj Auto 4.71%, IndusInd Bank 4.29%, Tata Steel 3.06%, Maruti 2.99% and PowerGrid 2 , 79%.
On the other hand, ITC cracked the budget proposal by 5.09% to increase the excise duty on cigarettes by 212-388%.
The IT stocks TCS, HCL Tech and Tech Mahindra also posted red numbers.
Indian markets were volatile at the first session of the week, with investors assessing the impact of the budget and a sell-off in China, said Narendra Solanki, Head of Fundamental Research (Investment Services) at AVP Equity Research, Anand Rathi Shares & Stock Brokers.
"With the budget behind, traders are now focusing again on the quarterly earnings season and the central bank's rate decision later this week," he added.
The markets received support from realty, metal, private banks, FMCG and even the majority of auto stocks, while PSU banks and selected pharmaceutical stocks felt anger among winners after the abolition of DDT.
In the sector indices, the indices for BSE raw materials, electricity, telecommunications, Bankex, durable consumer goods and FMCG rose, while the indices for IT and Teck were in the red.
BSE midcap and smallcap indices rose to 1.12%.
Vinod Nair, head of research at Geojit Financial Services, said: “After the setback of not meeting the high budget expectations, the market finds some sense. The purchasing manager index for the manufacturing sector shows a clear upswing and provides a breather that stabilizes the economy, as stated in the budget. "
Meanwhile, prices in Shanghai fell almost 8% as markets opened after a long New Year break.
Japan and South Korea ended in red, while Hong Kong posted profits.
A positive note is that the stock exchanges in Europe were opened.
Brent crude futures fell 0.81% to $ 56.16 a barrel.
On the currency side, the Indian rupee devalued 2 pairs and closed at $ 71.34 a day (within a day).