Automobile and metal stocks helped the Sensex, the Bombay Stock Exchange's benchmark 30-share index, rise about 2 per cent on Tuesday after a three-day post-Budget break, with foreign investor inflows and firm global markets adding to general market approval for Pranab Mukherjee's 2010-11 Budget.
The gains were led by Tata Motors, Tata Steel, Hindalco, ICICI Bank and ITC, in anticipation of an expansion in consumer demand after the finance minister rejigged tax slabs to raise disposable incomes. Shares of auto companies, in particular, jumped on reports of record monthly sales in February.
Most realty stocks, including DLF, India’s largest listed realtor, bucked the trend on concerns of service tax impositions announced in the Budget.
The BSE Sensex rose 343 points or 2.1 per cent to close at 16,772 and the broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE) was up 95 points or 1.92 per cent to close at 5,017.
Mid- and small-cap indexes were up 2.20 and 2.33 per cent on BSE respectively, portraying a broad market rally.
Global factors also played a part in today’s rally. “The rally was led by a combination of short covering and positive consumption data coming out of the US. The Euro Zone problems, too, seem to be getting resolved. We are expecting a higher range for Nifty index if the monsoons are good,” said Arindam Ghosh, chief executive officer of Mirae Asset Management.
| MAJOR SECTORAL GAINERS | |||
| 2-Mar-09 | Chg* | % Chg* | |
| Auto | 7478.81 | 307.82 | 4.29 |
| Metals | 17044.56 | 643.04 | 3.92 |
| Bankex | 10053.68 | 225.00 | 2.29 |
| FMCG | 2718.80 | 56.75 | 2.13 |
| Cap. goods | 13732.73 | 257.87 | 1.91 |
| * Over previous close | |||
Dealers at several broking firms said the rise was led by active buying by foreign institutional investors (FIIs). Provisional figures on the stock exchange website showed FIIs were net buyers of shares worth Rs 1,335 crore in the cash segment of the market. This huge buying interest from FIIs comes after nearly a month’s gap.
The finance minister’s Budget pledge to lower the fiscal deficit within the next three financial years and reduce surcharge on corporate tax for domestic companies to 7.5 per cent from 10 per cent also spurred market sentiment.
“People were sitting on the sidelines before the Budget. They did not expect a populist Budget,” said Vikram Kotak, Chief Investment Officer, at Birla Sun Life Insurance.
Tata Motors was the top gainer among Sensex stocks up 12 per cent at Rs 797 on the BSE after reporting strong vehicle sales. Tata Steel was up 6 per cent at Rs 609, Hindalco Industries gained 4.8 per cent at Rs 169 and cement major ACC 4.3 per cent at Rs 962.
The other gainers that rose above 3 per cent were Sterlite Industries, Wipro, J P Associates, Bhel and Bharti Airtel.
Jigar Shah, senior vice president at KIM ENG Securities, said the market will be range- bound in the future and take its cues from global markets again from next week.
Key reforms like decontrol of petrol and diesel prices, targeting food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector will also be keenly watched, investors said.
Market breadth showed 71.11 per cent or 2,063 stocks rose against declines in 26.40 per cent or 766 stocks on BSE.
In Europe, stock prices edged higher on Tuesday, tracking firm US markets. The key benchmark indices in France, Germany and UK rose by between 0.35 to 0.46 per cent. Asian shares closed higher on back of technology stocks gaining ground around the region, while Hong Kong lost ground after disappointing earnings results from HSBC. Chinese stocks were lower, with trade cautious ahead of China’s annual parliament sessions starting on Friday.
