|Smile after scowl: A stockbroker in Mumbai on Tuesday. (AFP)
May 18: A dramatic turnaround that started as a relief rally gained momentum as news trickled in around 2.30 pm that Manmohan Singh could be the next Prime Minister.
It pumped adrenaline into a market that was tiring as the bounce in share prices after Monday’s crash seemed headed for a correction. It was then that news trickled in about Sonia Gandhi declining to be Prime Minister.
Share prices took flight as activity in the dealer rooms turned frenetic on expectation of Manmohan taking the chair. Apprehensions about reforms generated by statements of Left leaders also appeared to evaporate.
Until yesterday comments like the one by CPM’s Sitaram Yechury that the disinvestment ministry ought to be shut down had been blamed for the crash on Friday, followed by a collapse on Monday, the Bombay Stock Exchange sensitive index losing close to 850 points in two days.
Today, the market recovered in the early part of the day and then towards the close the Manmohan punch gave it additional momentum. The sensex gained another 160 points, ending the day up 371.86 points, or 8.25 per cent.
“It’s an extremely suave move by Sonia Gandhi. She is magnanimous in victory,” said Ramesh Damani, a leading BSE broker. “Everybody gains by this move. She gains, the Congress gains and the country gains.”
Not to say the market gains, too, going by today’s evidence.
“Manmohan Singh is a unifying figure for the country, gushed Damani.
“The markets will give him a honeymoon period. He has the right credentials for leading the country as he is a non-controversial figure.
“For the stock market he is an endearing politician because he has the reforms credentials too.”
Sonia’s move saw the sensex recording its second biggest rise in history after a 426.05-point rise on March 24, 1992 during Harshad Mehta’s time.
“We want a common minimum programme and a PM very fast,” said Arun Kejriwal of Kejriwal Research and Investment Services. The markets will get a direction as soon as this is in place.
“Sonia Gandhi declining the Prime Minister’s post will help the new government to concentrate on governance, instead of getting bogged down in personal differences,” said Venkatesh Iyer, director at RK Chari Stock Broking.
“It has to be true and it has to be fast,” Iyer said about reports of Manmohan becoming Prime Minister.
In Delhi, finance ministry officials heaved a sigh of relief. “His (Manmohan’s ) name has done the job… it has brought the punters back to bourses.”
Yesterday’s crash had prompted the officials to keep vigil on the sensex today, after having spent last evening talking state run financial institutions into buying more stock today to stabilise the market. Most are Manmohan loyalists and some had worked with him in his last stint as finance minister.
There were whispers that several key officials were already in touch with him and were acting on his orders. Though their boss as of today remains outgoing finance minister Jaswant Singh, with Manmohan earlier tipped to succeed him, many officials appeared to have decided to renew their allegiance to their “old master”.
But the government-sponsored bull run was overtaken by a wave of buying that happy ministry officials described as “Manmohan magic”.
Manmohan had pioneered economic reforms, but this time he tried to give the party’s economic manifesto a human face, taking into account the Left’s views on ticklish issues such as privatisation and the need for stepping up investment in the social sector and agriculture.
Most Left leaders believe his first draft of a common minimum programme for the new alliance continues to have the same pre-poll flavour they liked.
But as far as the market crash and recovery is concerned, the Left continues to feel it “was sheer manipulation that has now been checked by pro-active steps”.
Nilotpal Basu, the CPM leader and member of the last joint parliamentary committee that probed market scams, believes so.
“I am getting information that this is part of the stock market manipulations which some brokers have been doing… we will be asking for a thorough enquiry into all this,” he said.