Indian shares rise on EU deal; defence, infrastructure stocks gain ahead of budget

BENGALURU: India’s equity benchmarks rose on Wednesday, extending gains from the previous day’s landmark trade deal with the European Union, while capital expenditure-linked stocks jumped ahead of the federal budget.

The Nifty 50 rose 0.66% to 25,342.75, while the BSE Sensex added 0.6% to 82,344.68. The benchmark indexes have risen about 1% in two sessions. The EU trade deal signed on Tuesday scrapped all tariffs on more than 90% of Indian goods.

“This deal opens a high-value consumer market for Indian exporters while positioning India as Europe’s most reliable long-term growth partner…. (It also) reshapes capital flows (and) strengthens investor confidence,” said Amit Jain, co-founder of Ashika Global Family Office Services.

Thirteen of the 16 major sectors logged gains. Energy and metal stocks led the rise with a 4.2% and 2.3% gain, respectively, on higher crude oil and base metal prices.

Broader mid-caps and small-caps rose 1.7% and 2.3%, respectively.

“Sectors that are expected to be in focus in the budget, like railways and defence, have done well today. Apart from that, buying is seen in mid-cap and small-cap companies that have reported strong earnings for the December quarter,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

Defence index soared 7%, while public sector enterprises and infrastructure stocks rose 4.6% and 1.1%, respectively.

Investors await the U.S. Federal Reserve’s policy decision later in the day, where it is widely expected to keep rates unchanged.

Bharat Electronics soared 8.9% to a record on higher profit.

Asian Paints dropped 4.2% on subdued volume growth in the December quarter, while Mahindra Logistics and Motilal Oswal Financial Services jumped 15% and 7.5%, respectively, on upbeat earnings.