The Telegraph
Since 1st March, 1999
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Sparks ignited for Friday flare-up

Mumbai, Jan. 8: Dalal Street was on its toes for a Friday frenzy after a throbbing Thursday saw the sensex zoom to a record high and the government dish out a platter of tax dollops that was too late for the market to feast on.

Markets started on a firm note, but with no inkling of the bonanza that was to come late in the afternoon. The sensex opened at 5992.10, rallied to an intra-day high at 6118.62 before ending at the all-time record high of 6108.54, a smart gain of 151.52 points, or 2.54 per cent. NSE’s Nifty closed 51.80 points or 2.70 per cent at 1968.55.

Through of all this, however, the markets were driven by Wednesday’ announcement allowing margin trading and stock lending on bourses. Few had anticipated that the long-planned pre-poll boosters would unspool the way it did a little after three this evening.

“The markets will be on fire Friday,” said Arun Kejriwal of Kejriwal Research and Investment Services. There is another potential propeller: Infosys’ third-quarter numbers, due to be released by Friday noon.

Dealers and investors, buoyed by today’s spectacular gains, were left ruing the fact that reports of the tax cuts came in so late. Had the announcement come early in the day, indices would have soared into stratosphere.

“It’s an election-oriented move,” said a fund manager affiliated to a leading mutual fund. “The government is preparing for elections and it seems they are pulling out all stops to win over people,” Kejriwal added.

Hard questions appeared lost in the din and cacophony of the bull charge. How will the government offset the losses on account of duty cutbacks' Will the fiscal deficit widen' As these questions plagued some minds, there were others who reasoned that fresh consumer demand arising out of tax cuts would more than offset the decline in revenues.

On the BSE, gainers outnumbered losers 3.5:1. Around 1694 shares advanced, while 485 declined. In the specified group, 177 shares, including 28 from the index, registered a sharp to moderate gains; 20 others closed with losses. The rally was spread across sectors. Among the major gainers were index stocks including SBI, ITC, Bharti Tele-Ventures, Larsen, ONGC, Bhel, Grasim, Satyam, Zee, Infosys and Reliance, which went up smartly.

The past few days have seen the tired markets getting its bounce back after a spate of positive news on the economy front. The Planning Commission and Reserve Bank of India, and Sebi allowing margin trading and securities lending were propellants for the market to rally.

PSU stocks were in the limelight and the ones that appreciated the most. It closed up 4.53 per cent at 4361.89 following strong gains in the banking and oil and gas stocks. The broad-based BSE-100 index jumped 104.88 points to 3297.19 from its previous close of 3192.31.

FIIs, having made record investments of over Rs 35,000 crore in Indian markets last year, kept up the tempo even in the current year, making net purchases of a staggering Rs 973 crore in the four sessions to January 6. Grasim flared up by Rs 68.45 to Rs 1118.70, &T by Rs 39 to 573.55, Reliance by Rs 9.80 to Rs 589.45, Infosys by Rs 164.90 to Rs 5838.95, ITC by Rs 54.75 to Rs 1077.25, Tata Motors by Rs 17.90 to Rs 465.25 and ACC by Rs 7.65 to 274.

Rupee hardens

The rupee firmed up further against the dollar, closing at 45.54 as a steady stream of dollars and reduced demand by public sector banks for dollars gave the Indian currency a boost in the inter-bank forex market. It opened at 45.55 and rallied to 45.52 for a brief period before finishing with a gain of three-and-a-half paise. Against the pound sterling, the rupee resumed at 82.66 per sterling and rallied to close at 82.45, showing a smart rise of 28 paise over Wednesday’s close of 82.73.

Gold dips

Gold fell to Rs 6295 per 10 grams in Mumbai, showing a sharp setback of Rs 65 over its previous close of Rs 6360. Pure gold started a subdued note at Rs 6345 and fell further sharply on fresh offering, before closing at Rs 6335, also showing a same fall over the previous close of Rs 6400.

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