Huge rally and then the U-turn

VOLATILE MARKETS: BSE FMCG index top gainer among sectoral indices

Stock markets witnessed a highly volatile trading session on Monday. The key equity indices fell from their intra-day highs to close with marginal gains on the back of profit-booking. While there were no negative cues from the Union Budget, investors lacked the confidence for buying due to poor global sentiments in the backdrop of the ongoing West Asia crises.

The Bombay Stock Exchange’s (BSE’s) Benchmark Sensex gained 122 points, or 0.7 per cent, to close at 17,823. The broader equity index S&P CNX Nifty of the National Stock Exchange (NSE) ended 30 points up, or 0.56 per cent, at 5,333. The Sensex gained 596 points in intra-day trading to rise above the 18,000-mark after Finance Minister Pranab Mukharjee’s budget speech.

The BSE FMCG index was the top gainer among sector indices. The index rose 4.47 per cent on BSE. The BSE PSU (public sector undertaking) index was up two per cent and the BSE Realty index gained 1.3 per cent. Realty stocks were up in particular as the Budget raised limit of priority home loan from Rs 20 lakh to Rs 25 lakh and gave one per cent interest subvention on home loans up to Rs 15 lakh.

The mid- and small-cap indices on BSE were up 0.31 per cent and 0.36 per cent, respectively.

“There are no major negative cues on the domestic front now. Concerns of instability in the government are out of people’s mind. The Budget session started smoothly and functioning of Parliament was not disrupted by the Opposition. The Budget was pragmatic and investors will only look at the global scenario in the backdrop of West Asia crises before fresh money flows into the country,” said Dharmesh Mehta, managing director at Mumbai based Enam Securities.
 

TOP GAINERS
	28-Feb-11	% chg*
ITC	169.00	8.23
Mahindra & Mahindra	614.10	3.19
Maruti Suzuki	1206.70	3.07
ONGC	270.65	2.93
Sterlite Ind	163.50	2.38
TOP LOSERS
	28-Feb-11	% chg*
Reliance Infrastructure	609.55	-4.46
JP Associates	77.50	-2.88
Hero Honda Motors	1464.95	-2.36
Tata Motors	1081.80	-2.11
Tata Power	1154.65	-1.79
*Over previous close,  Compiled by BS Research Bureau

Mehta, however, feels questions will remain about how the finance minister manages his aggressive fiscal deficit target along with the oil subsidy and meets the goal on divestment.

Mukherjee projected the fiscal deficit at 4.6 per cent of the gross domestic product (GDP) for the financial year 2011-2012. He said the government would provide Rs 23,000 crore subsidy to public sector oil marketing companies and would raise Rs 40,000 crore through a divestment programme in the coming financial year.

“Fresh buying is expected in the next few days as positive reports from stock broking firms flow into the market. The ploy to attract foreign money into markets by encouraging FII (foreign institutional investment) in mutual funds may just work,” said Ajay Pandey, vice-president at Intime Spectrum Securities.

“The biggest positive impact on sentiment is the move to allow foreign individuals who meet the Securities and Exchange Board of India’s (Sebi’s) ‘know your customer’ (KYC) norms to invest in domestic mutual funds. This opens up a new source of funding for the current account deficit as well as for Indian equities. The divestment does not appear disruptive to the market,” said Ridham Desai and Sheela Rathi of Morgan Stanley in their report on Monday, titled India Strategy.

The overall market breadth was positive as 54.48 per cent or 1,598 stocks advanced against the declines of 41.05 per cent, or 1,204 stocks listed on BSE.

Top gainers in the benchmark index included FMCG major ITC, up 8.23 per cent at Rs 169. A sharp fall was seen in Sesa Goa, which was down 6.8 per cent at Rs 263.3 on NSE.Auto major Mahindra and Mahindra gained 3.19 per cent at Rs 614 and Maruti Suzuki was up 3.07 per cent at Rs 1,206.