Short-covering, buying fuel shares

STOCK MARKET

The cut in corporate tax rate, the thrust on infrastructure push the Sensex to a new peak.

Share market indices soared to an all-time high at close today. Investors made fresh purchases but the major upswing came on account of short-covering, brokers said.

The announcement of a cut in the corporate tax rate and the emphasis on both rural and urban infrastructure development was taken very positively, they added.

Despite a marginal hike in the securities transaction tax (STT), the mood was upbeat as the government has allowed losses from speculative transactions in the derivatives market to be set off against business gains. This will also help increase the volume in the derivatives segment, they added.

Sectors like banking, refinery, tyres, sugar and tea were in the limelight following the announcements of sector-specific sops in the Budget. Hopes of imminent reforms boosted the prices of bank stocks.

The State Bank of India scrip was among the top gainers in the Sensex basket, rising 4.25 per cent to close at Rs 714.40. The ICICI Bank scrip was up 3.68 per cent to Rs 380.75 and the HDFC Bank scrip gained 3.09 per cent to Rs 586.90.

The stock prices of oil companies surged on the announcement of a cut in import duty on crude oil imports. The HPCL scrip was up 2.15 per cent to Rs 351.25, BPCL gained 3.65 per cent to Rs 427.75 and Indian Oil was up 1.27 per cent to Rs 491.45.

The prices of cement company stocks jumped on the Budget's focus on infrastructure development. The Gujarat Ambuja Cements scrip was up 3.57 per cent to Rs 449.35, UltraTech Cemco gained 2.15 per cent to Rs 372.25, Grasim was up 2.03 per cent to Rs 1,345.60 and ACC was up 1.72 per cent to Rs 367.

The mood was optimistic as the Budget aimed to extend the tax net as part of fiscal reforms. High net worth investors cheered the restructuring of personal tax rates, with personal tax slabs being rationalised.

After a brief stint in negative territory in early afternoon trades, the benchmark Bombay Stock Exchange (BSE) Sensex closed higher as investors turned big buyers in the latter half of the trading session, after the Budget speech. Banking, technology, metal and oil counters were among the biggest gainers today.

In the BSE Sensex basket, 27 out of the 30 scrips closed lower. The breadth of the market was positive, with gainers outpacing losers 13:10.

The BSE Sensex hit an all-time high of 6721.08 and a low of 6545.94 in intra-day trades before closing at 6713.86, up 144.14 points (2.19 per cent) from Friday's close.

Volumes were higher than on Friday in the cash segment of the bourses: the BSE reported a turnover of Rs 2,951.23 crore and the NSE reported a turnover of Rs 6,387.26 crore.

Gurunath Mudlapur, research head at Khandwala Securities, said, "Short covering coupled with fresh buying helped the market post gains today."

Added Chandir Gidwani, chairman, Centrum Finance: "By clarifying that F&O trades income is not to be treated as "speculative," the finance minister has delivered a master stroke."

Cigarette major ITC was marginally up by 0.58 per cent to Rs 1,294.55, bouncing back from the day's low of Rs 1,244 as buying resumed on hopes that savings from the cut in corporate tax will be more than the losses from the proposed 10 per cent surcharge on tobacco products, analysts said.

Hero Honda was the biggest gainer in the Sensex basket, rising 4.56 per cent to close at Rs 544.25, and the Wipro scrip was up 3.66 per cent to Rs 699.15.

The three losers in the Sensex basket were Maruti Udyog, down 0.25 per cent to close at Rs 473.15, BHEL, down 0.38 per cent to Rs 858.40, and Zee Telefilms which fell 1.77 per cent to Rs 141.85.

Foreign institutional investors were net buyers of Indian shares worth Rs 464 crore on Friday as per data from the Securities and Exchange Board of India website. Strong buying support from foreign funds helped the market record gains.