Market celebrates, expects further gains

In the wake of the duty cuts announced, stock market indices are expected to show a mixed performance on Friday, with specific sectors reporting strong gains, enough to pull the market higher at close.

Domestic fund houses expect the Sensex will gain at least 100 points tomorrow after opening 60-70 points above today's closing level.

The Bombay Stock Exchange (BSE) Sensex reacted to the announcements by zooming 30 points in the last 10 minutes of the day's trading, building on the over 120 point gain earlier in the day to close at 6,108.54. This was 151 points higher than Wednesday's close.

The broader National Stock Exchange (NSE) S&P CNX Nifty jumped 2.7 per cent (51.80 points) to a historic closing peak of 1,968.55 points. Gainers outpaced losers 1492:384.

The markets were in a celebratory mood as traders cheered the government's promise to push ahead with its privatisation programme despite the prospect of early national elections.

Sentiments were also buoyed by the market regulator's move to allow stock lending and margin trading yesterday.

Meanwhile, a handful of fund managers interviewed by Business Standard this evening were of the opinion that the government's decision was aimed at long-term economic growth.

S Bhat, equity head of Tata Mutual Fund, said the concessions on excise duty would provide the much-needed boost to the economy by increasing industry's operating margins.

He added that the direct tax measures would leave consumers with more disposable income, something that would have a cascading effect on corporates.

Krishnamurthy Vijayan, chief executive officer of JM Capital Asset Management, said the policy measures indicated that the Vajpayee government was certain about regaining power at the Centre.

"The market may go down tomorrow as the implications become clearer. In fact, I expect the market to be mixed. Some stocks will go down and some stocks up, depending upon what effect the tax cuts will have on companies. The profitability of some big companies will be impacted. A lower import regime is definitely good and, overall, the measures will contribute to the feel-good factor," Sanjay Prakash, CEO of HSBC Asset Management India, said.

Jitendra Panda, vice-president (retail) at Motilal Oswal Securities, said: "The proposals are very favourable for corporates and this will have a positive impact on the market, resulting in the Sensex opening at a higher level. Software, telecom and pharmaceutical sectors will benefit the most and other sectors will also benefit from these measures, indirectly."

Alok Vajpayei, president of DSP ML Mutual Fund, said the changes announced in the mini-Budget were positive and would enhance consumption.

All these, he said, would keep alive the bullish sentiment in the market, which was expected to move positively in the near future.

Meanwhile, sensing some fiscal announcements, the markets were bullish on state-owned companies since morning.

The Oil and Natural Gas Corporation scrip jumped 4.65 per cent to Rs 944.10 and Gail (India) Ltd surged 2.34 per cent to Rs 279.60 after Disinvestment Minister Arun Shourie announced that the divestment of these companies would be held as per schedule.

Hindustan Petroleum Corporation Ltd gained 2.32 per cent to Rs 460.70 and Mahanagar Telephone Nigam Ltd rose 4.71 per cent to Rs 148.90.

Index heavyweights ITC surged 5.35 per cent to Rs 1,077.25, the State Bank of India added 4.33 per cent to Rs 622.05 and Reliance Industries jumped 1.69 per cent to Rs 589.45.

Infosys Technologies, which is slated to announce its quarterly earnings on Friday, rose 2.91 per cent to close at 5,838.95.