Sensex up 36 pts, gilt prices climb

The markets flared up at the fag-end of the trading day after Finance Minister P Chidambaram announced changes in the proposed transaction tax.

The BSE Sensex gained almost 70 points in two minutes, sweeping past the 5,000 mark to the day's high of 5,041.19 before profit-booking by day traders pulled it down to 4,993.76 at close.

At the end of the day, the Sensex was 0.72 per cent (35.88 points) higher than Tuesday's close and the S&P CNX Nifty closed 0.98 per cent higher at 1,581.40. Twenty-one of the 30 scrips in the Sensex basket ended with gains.

The government securities market cheered the government's decision to waive the turnover tax on the debt market, with prices in the long- and medium-end maturity going up by almost Re 1.

Brisk trading was reported as dealers had one less pressure point to contend with. But profit-selling emerged in the last hour of trading as traders set their minds on the inflation numbers due to be released on Friday.

The yield on the 10-year benchmark 7.37 per cent 2014 paper fell to an intra-day low of 5.81 per cent before closing at 5.84 per cent, almost unchanged from yesterday's level.

Dhiren Mehta, president of the Fixed Income Brokers' Association, said the transaction tax waiver would not only improve liquidity and price discovery in the debt market, but also lead to a reduction in the government's borrowing costs.

In the equity market, all segments cheered the "pragmatic solution," as some described it. Kotak Securities Managing Director Narayan SA said, "The differential tax structure for delivery and non-delivery trades is a positive step and the markets will take this as a right signal."

The breadth of the market was positive with gainers outpacing losers 5:4 in brisk trades, with the BSE reporting a turnover of Rs 1,489 crore, and the National Stock Exchange Rs 3,620 crore.

Among the sectoral indices, the BSE PSU index was the biggest gainer, closing with gains of 1.71 per cent at 3,191.91. However, the policy announcements failed to enthuse the sentiment for FMCG and pharmaceutical scrips, with the result that the BSE FMCG index and the healthcare index were the only losers.

According to brokers, the markets flared up in the last 10 minutes of trading as traders short-covered their positions in the cash market.

Among Sensex stocks, the two Tata group stocks, Tata Power and Tata Steel, were the top two gainers. Tata Power gained 3.66 per cent to Rs 263.10, while Tata Steel surged 3.35 per cent to Rs 356.65, after hitting an intra-day high of Rs 364.

The State Bank of India scrip gained 1.73 per cent to Rs 440.90, Reliance Industries gained 1.42 per cent to Rs 434.75 while the ONGC stock was up 0.98 per cent to Rs 699.50. The HDFC scrip was up 3.40 per cent to Rs 566.70, while the MTNL stock gained 2.42 per cent to Rs 133.30 and Bharti Tele-Ventures gained 1.19 per cent to Rs 157.15.

Auto stocks witnessed renewed buying with the pivotal Maruti Udyog scrip up 1.55 per cent to Rs 426.55, the Hero Honda scrip up 1.15 per cent to Rs 441 and the Bajaj Auto scrip ending 0.82 per cent higher to Rs 838.90.

Tech major Infosys Technologies ended 0.73 per cent lower to Rs 1,437.10 on selling pressure amid fears that investors may churn their portfolio to make way for the Tata Consultancy Services IPO. Satyam Computers, meanwhile, gained 2.45 per cent to close at Rs 334.20.

Delayed monsoons cast a pall of gloom on cement stocks. The Grasim scrip fell 1.38 per cent to Rs 959, Gujarat Ambuja Cements dropped 0.82 per cent to Rs 27.60 and the ACC scrip ended 0.37 per cent lower to close at Rs 231.85.