Cement, steel stocks lift Sensex 85 points

Commodity stocks rose as freight rates were left unchanged in the Railway Budget.

Prices of commodity stocks, principally steel and cement, were in the limelight on Tuesday after Railway Minister Lalu Prasad left freight rates unchanged in his maiden Railway Budget.

The Bombay Stock Exchange (BSE) Sensex finished 1.75 per cent (84.82 points) higher at 4,928.59, its highest close since June 10. The tame Railway Budget also triggered a rally in bond prices and the yields on bonds dipped as the market took comfort from the fact that the inflation rate would not rise.

While long-term bond prices rallied 50-60 paise, the yield on the 10-year benchmark 7.37 per cent 2014 paper closed at 5.70 per cent, down from 5.75 per cent yesterday.

Although the undertone in the foreign exchange market was bullish, the rupee depreciated by 22 paise to close at 46.03 to a dollar, versus its close of 45.81 yesterday.

In the foreign exchange market, premiums on forward dollars softened with the expectation that the rupee would appreciate after the Budget.

Market sources attributed the sharp recovery in the equity market to relief buying in scrips "" especially blue chips "" which had recently been hammered, pulling the Sensex to an intra-day high of 4,939.40. The 30-scrip Sensex basket saw 28 scrips closing with gains. Gainers outpaced losers 9:6 on the BSE.

Kashyap Pujara of brokerage house Sushil Finance said most scrips surged on hopes of a market-positive Budget on Thursday, after the Railway Budget turned out to be less populist than anticipated. Short-covering and bargain-buying helped the market post gains yesterday, said a fund manager.

The market gained momentum after the mid-session following the presentation of the Railway Budget. Players said that the Sensex was flat till the afternoon.

Volumes, however, were subdued on the bourses, with the BSE reporting a turnover of Rs 1,592.06 crore and Rs 3,823.15 crore on the National Stock Exchange (NSE).

Tata Power was the biggest gainer in the Sensex basket, up 6.84 per cent, to close at Rs 251.65, on reports that it might get power from ONGC's proposed gas-based plans. Commodity stock Hindalco was up 5.18 per cent to Rs 1085.25 and BHEL gained 3.96 per cent to Rs 524.10.

The only two losers in the Sensex basket were tech bellweather, Infosys Technologies, which lost 0.24 per cent to Rs 1,426.30 and Bajaj Auto, down 0.18 per cent to Rs 899.50.

Cement stocks were up on being spared a freight hike. ACC was up 2.74 per cent to Rs 243.70, Grasim gained 2.11 per cent to Rs 1,034.30 and Gujarat Ambuja Cements was up 1.62 per cent to Rs 276.65.

Similarly, steel stocks also gained. Tata Steel was up 3.61 per cent to Rs 313.25 and the Steel Authority of India scrip surged 5.2 per cent to Rs 30.10.

ONGC was up 3.36 per cent to Rs 689.35, MTNL gained 2.04 per cent to Rs 135.05 and HPCL was up 0.63 per cent to Rs 321.90.

Heavyweights ITC gained 2.40 per cent to Rs 939, the Reliance Industries scrip was up 1.80 per cent to Rs 438.30, the State Bank of India scrip was up 1.75 per cent to Rs 438.40 and the HLL counter gained 0.20 per cent to Rs 127.55. ICICI Bank was up 2.48 per cent to Rs 241.35 and HDFC Bank gained 1.49 per cent to Rs 367.05.

Hero Honda was up 2.49 per cent to Rs 528.70, Tata Motors was up 1.95 per cent to Rs 384.85 and Maruti Udyog rose 2.06 per cent to Rs 409.25.

The BSE PSU index was the biggest gainer yesterday, closing 2.45 per cent higher, followed by the consumer durables index, up 2.24 per cent and the Bankex was up 1.83 per cent.

In fact, all major indices closed in positive territory yesterday. The BSE healthcare index gained 1.10 per cent, while the FMCG index gained 0.95 per cent and the IT sector index was up 0.42 per cent.

Foreign institutional investors were net buyers of Indian shares at Rs 47.90 crore on Monday, while domestic mutual funds were net sellers at Rs 36.30 crore on Monday.