The Telegraph
Since 1st March, 1999
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Budget brew whets appetite for stocks

Mumbai, March 3: Six indices scaled historic highs on bourses today, hoisted by investors gradually waking up to the fact that the budget gave more than it took.

The sensex, the BSE 200 Index, the BSE 500, the BSE capital goods index, BSE metals index and BSE bankex closed at levels not seen before. Foreign investors, buoyed by spin-offs from the budget, poured huge sums into stocks.

The sensex opened at 6700.79, shot up to a new intra-day high of 6794.22 before profit-taking took it to 6784.72 ' a new record close and 97-point gain over Wednesday.

Brokers said buying interest was seen in all sectors. Mid-cap shares and heavyweights scored big gains on heavy purchases by FIIs and local financial institutions.

Oil, gas, banks and technology shares led the charge. ONGC was the biggest gainer, jumping by Rs 33.20 to Rs 889.50 on reports of a large gas-find in the Krishna Godavari basin. Reliance Industries rose Rs 9.65 to Rs 558.45.

'The whole budget is, indeed, focused on the finance minister's stated intention of transforming India from a nation of savers to a country of investors,' said a manager affiliated to a leading private sector mutual fund.

Broking houses say the markets have seen a lot of churning as stronger investors mop up stocks at higher prices. Block deals have also increased considerably in the past month, the last one being Wednesday's sale of ONGC shares by an associate company of the Reliance group.

'Stock picking will be tougher as most shares have appreciated considerably and the risks are higher,' the manager said. Most of them are sitting pretty with handsome bonuses and realise pulling off the feat again will be tough.

'What's heartening is that leading FIIs seen as long-term investors by nature ' Calpers, Fidelity and a few other pension funds ' have set up base in India. New investors from developed Asian countries and West Asia are also looking at India,' an analyst said.

The optimism among the FIIs after the budget can be seen from the fact that they have pumped Rs 1,580 crore ($361 million) into local shares since the February 28 presentation. Foreign investors continue to remain optimistic despite disappointment over fiscal consolidation expressed by international rating agencies. JP Morgan has, however, raised its forecast for the sensex to 8000 from 7000.

The post-budget revision was on account of three key factors. The investment bank said it saw a shift in local savings from cash and bonds to equity. Two, it expected higher corporate earnings. Three, it was impressed with the pro-reform steps announced ahead of the budget.

Meanwhile, BSE has rescheduled trading timings till March 18 as V-sat services could get disrupted due to heavy solar activity. NSE, too, will follow the same timings, except for a break from 11.45 am to 12.25 pm.

Bullion block

Bullion merchants today protested the proposal to levy excise duty on branded jewellery by keeping their shutters down. Gold traders went off business in Delhi, Calcutta, Chennai, Uttar Pradesh, Rajasthan and Gujarat. Their counterparts in Mumbai will join the protest from Friday.

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