Mumbai, Feb. 17: The stock markets finally took off on a pre-budget rally as fears of a war in West Asia receded and investors started speculating on the sops for industry in the coming budget. The Sensex gained by 59 points at close today.
Encouraged by receding war fears, foreign institutional investors (FIIs) made all-round purchases in select key stocks like Satyam Computers, Infosys Technologies, Tata Steel, Telco, Zee telefilms, ACC and some others.
Speculators and retail investors seemed to have made large commitments in a number of shares on strong expectations of a favourable budget in the light of reports that finance minister Jaswant Singh is likely to abolish dividend tax and surcharge on corporate tax in the forthcoming budget.
The BSE benchmark 30-share index (Sensex) opened remarkably higher at 3248.90 and gradually moved upwards to the intra-day high at 3287.01 before ending at 3282.45 as against last Friday's close of 3223.41, a net rise of 59.04 points or 1.83 per cent.
Traders consider the 59 points gain in Sensex to be the biggest single-day rise this year. The Nifty rose by 22.17 points to settle at 1,058.2.
However, many attribute today’s rise to receding tensions in the Gulf following UN inspectors denial of finding any concrete evidence of weapons of mass destruction in Iraq.
“It could return and the markets could again be on the wringer,” they warned. “The fears of a war receding to the background was an overriding factor in today’s rally,” they added.
Gainers outnumbered losers three to one, with volumes rising to 6.77 crore from its previous trading day's 5.8 crore. The broader National Exchange index rose 2.14 per cent. However, the volume of business was relatively low at Rs 1084.50 crore from Rs 1096.11 crore last weekend, indicating that it was the low-value stocks that were traded heavily on the counters.
While the rally was broad-based, Arun Kejriwal of Kejriwal Research & Investment Services said the rally was marked by the surge in values of highly speculative stocks like Silverline and DSQ Software. “These stocks appreciated with a surge in volumes,” he said.
Among the major pivotals, Reliance and State Bank were in the limelight. The State Bank share gained Rs 10.40 to Rs 308.35 on hopes that the government would raise its FII limit.
Market sentiments were hugely supported by indications that the United States was unlikely to go to war against Iraq in the immediate future.