The Telegraph
Since 1st March, 1999
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Sensex salutes Chidambaram

Mumbai, May 24: Last week it was the Manmohan magic that worked wonders, and a battered sensex, the stock market bellwether index, gained close to 500 points in two consecutive trading sessions on Tuesday and Wednesday.

Today it was the charm of Palaniappan Chidambaram which sent share prices racing.

The stock markets gave a rousing welcome to the country’s new finance minister and the 30-share Bombay Stock Exchange index jumped 162 points.

Chidambaram, who had served as finance minister in the United Front government in 1996-97, is well-known for his progressive measures.

“Concern over the slowing down of reforms process has been eased. There is some confidence that the reform process would not be affected,” a broker said.

“While Chidambaram has in the past introduced measures that were beneficial to the capital markets, his arrival could even inject confidence into the foreign institutional investors (FIIs),” he added.

Led by Infosys Technologies, IT stocks hogged the limelight scoring impressive gains on the back of heavy buying support throughout the session.

As a result, the BSE benchmark 30-share index opened firm at 4993.45 and gradually moved upwards to the intra-day high of 5132.90 before closing the day at 5123.23 compared with last Friday’s close of 4961.57, a net rise of 161.66 points or 3.25 per cent.

The statement by Chidambaram after the midsession that the Indian economy is in a resilient mode and his priority would be to consolidate the growth momentum with special emphasis on agriculture, manufacturing and employment came as a shot in the arm for the market which had already turned optimistic on the government's commitment on reforms.

Investors turned so confident that they discounted the anti-privatisation passage in the draft common minimum programme of the government.

Operators and domestic financial institutions made hectic purchases following clear indications that the process of economic reforms would be carried forward by the Congress-led United Progressive Alliance.

The buying witnessed today culminated in all the sectoral indices ending in the positive territory. The BSE PSU index gained by 26.72 points while the Bankex rose 37 points. The IT sector index was the largest gainer with over 139 points gain.

Infosys spurted by Rs 415.05 to Rs 5319.20. Satyam, Wipro, Geometric Software, Hughes Software, HC Technologies, i-flex and Mastek notched up good gains. Brokers said the buying in Infosys came ahead of the share turning ex-dividend.

Buying was also well spread across other counters that included Reliance Industries, SBI, Grasim, ACC, Gujarat Ambuja.

However, there were some voices of caution. Analysts feel it is still too early to conclude that pace of the reforms will not slow down.

“Many investors are awaiting further details of the common minimum programme. Moreover, they also want to seek specific measures from the government that will set the tone for a reforms-friendly government,” an analyst at Khandwala Securities said.

Merrill Lynch has, for instance, cut its rating on Indian stocks to ‘market weight’ from overweight pointing out that investors should wait for measures from the new government.

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