The mood on the street remained edgy on Monday ahead of the UPA-sponsored vote of confidence on Tuesday as India’s benchmark stock index rose to its highest in more than a week.
Prime Minister Manmohan Singh has to prove his majority in the Lower House of Parliament after the Left parties withdrew support on July 9 over the Indo-US nuclear deal. The Bombay Stock Exchange (BSE) Sensex closed at 13,850.04 points, up 1.57 per cent, or 214.64 points. S&P CNX Nifty-50 closed at 4159.5 points, up 1.64 per cent or 67.25 points.
Banking stocks rose with the BSE Bankex closing at 6428.71 points, up 239.82 points or 3.88 per cent. Badly battered stocks such as ICICI Bank (up 4.29 per cent to Rs 644.1), State Bank of India (up 3.67 per cent to Rs 1347.45) and HDFC Bank (up 4.78 per cent to Rs 1082.95) saw buying on Monday.
Marketmen said the market was rooting for the status quo since any change in the government would upset policy calculations. “Last time, the Congress took charge from the BJP, it took 15 months for the power sector policy to get back on track. The market does not want these kinds of procedural delays,” said Kamlesh Kotak, vice-president-research at Asian Markets Securities.
No wonder, sentiment turned against sectors such as capital goods and consumer durables. The BSE Capital Goods Index was down by 0.75 per cent and consumer durables index was down by 0.07 per cent.
For the most part, the market has already discounted a UPA win. But obviously, politics being what it is, there would be a knee-jerk reaction on the downside, should the government fail on the floor of the House tomorrow, said brokers.
There are others who have drawn up a list of stocks, which will be immune to the mad swings of politics. Pravin Chakraborty, chief operating officer at BNP Paribas Securities has said, in a note, “UPA or NDA?—Doesn’t matter. We say Maruti, ICICI, Infosys, Bharti and Idea.”All have earnings risk priced in and are available at near distress valuations, said the note.
Most big investors are waiting on the sidelines to watch how the scene plays out tomorrow. Foreign institutional investors sold equities worth Rs 62.22 crore, while domestic institutional investors sold equities worth Rs 230.96 crore.
“Markets want clarity on uncertainty. It has rallied on Monday partly as a result of short covering and party due to softening of crude oil prices,” said Jignesh Shah, head of Equities, private banking at ABN AMRO Bank.
