Indian stocks rise on EU deal, defence and infrastructure stocks gain before budget

India's benchmark equity indexes rose on Tuesday, continuing a trend of gains from the landmark trade agreement with?the European Union that was signed the day before, while stocks linked to capital expenditures soared ahead of?the federal Budget.

The Nifty 50 index rose 0.66%, to 25,342.75, and the BSE Sensex gained 0.6%, to 82344.68. In two sessions, the benchmark indexes are up about 1%. The EU trade agreement signed on Tuesday eliminated all tariffs?on more that 90% of Indian products.

This deal reshapes capital flows and strengthens investor trust, said Amit Jain. Thirteen out of 16 major sectors posted gains. The energy and metals stocks led the way with gains of 4.2% and 2.3%, respectively, due to higher crude oil prices and base metals.

The broad mid-caps as well as the small-caps both rose by 1.7% and 2.3% respectively.

Today, sectors that will be a focus of the budget like defence and railways have performed well. Sunny Agrawal is the head of fundamental equity analysis at SBICAPS Securities. She said that buying was also seen among mid-cap and smaller-cap companies, which had reported solid earnings for December's quarter. Defence index rose 7% while infrastructure and public sector enterprises stocks rose by 4.6% and 1% respectively.

Investors are waiting for the U.S. Federal Reserve to announce its policy later in the day. It is widely expected that the Fed will keep rates the same.

Bharat Electronics' profit soared by 8.9%, setting a new record.

Asian Paints fell 4.2% on a subdued growth of volume in the December quarter. Mahindra Logistics, Motilal Oswal Financial Services, and Mahindra Logistics jumped 15.5% and 7.5% respectively due to positive earnings. Reporting by Vivek M and Bharathrajeswaran, Editing by Ronojoy Mazumdar and Mrigank Dhaniwala; Sherry Jacob Phillips, Harikrishnan Nair and Harikrishnan Nair

(source: Reuters)