The stock market staged a smart comeback on Tuesday after a knee-jerk reaction and sharp crash post the Budget announcements.

Experts told BusinessLine that markets’ views have softened after going through the fineprint of the Budget announcements. The Sensex rose 917 points or 2.3 per cent to close at 40,789. The Nifty index gained 2.32 per cent or 271 points at 11,979.

On the Budget day, the Sensex nearly crashed by 1,000 points on fears that the Finance Minister’s announcement on a new tax regime for individuals would hurt the business of large insurance companies and even banks, particularly on the housing loan front. But since calculations showed that most people belonging to the salaried class may stick to the old tax regime as it is more beneficial, the nervousness dissipated.

Also, a slew of positive measures for foreign portfolio investors were announced in the Budget. Provisional data showed that FPIs were net buyers of stocks worth ₹366 crore, while domestic institutions made net purchases of ₹601 crore.

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“A long bull candle was formed today with unfilled opening upside gap. Technically, this pattern indicates an exceptional comeback of bulls after a deep cut. The range of weakness of the trading session of Union Budget 2020 has been covered completely on the upside by the last two sessions upside bounce. This could be a positive indication for the short term, but the negative reversal pattern is still intact and we expect this upside bounce could eventually form a new lower top. The next overhead resistance to be watched is around 12100 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Shanghai rebounds

Also, there was respite from last week’s global market rout due to fears of China-originated coronavirus hitting global consumer demand.

After falling as much as 8 per cent on Monday, the Shanghai Composite index gained 1.34 per cent on Tuesday as China’s central bank is injecting around $60 billion into the financial markets.

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