Markets regained some of the post-budget optimism in opening trades,
with the finance minister going on a media overdrive to assure industry that
he meant no harm to anyone. Yesterday, he stated that divestment was not off
the radar but has only been moved out of the budget. Divestment proceeds will
now go to a National Investment Fund to fund infrastructure and the target
for next year is around Rs7,000 crore.
Today,
in his address to industry chamber FICCI, Chidambaram promised to look into
industry complaints on taxation of fringe benefits and the transaction tax
on cash withdrawals. He also assured the industry that VAT is well on track,
that he would consider VAT on imports and the need to converge excise rates
to the CENVAT rate, currently at 16 per cent. Finance
heads of IT companies, stocks of which took a beating yesterday, are of the
opinion that fringe benefit tax may not affect them much if genuine business
expenses like travel and telephone expenses were excluded. Foreign
brokerage JP Morgan struck a divergent note by giving the budget positive
rating and setting a year-end sensex target at 8000, considerably higher than
the 7000-7250 range touted by other brokerages. sensex closed at 6687, up
36 points and the Nifty at 2093, a gain of 9 points. Nifty futures continued
to trade marginally lower than the spot index. US
markets bounced back yesterday, ahead of the Fed Reserve chairman's Congressional
testimony, where he is widely expected to pronounce a positive outlook for
the US economy. Oil prices continued to rule steady on expectations of higher
demand. Indian ADR's ended weak with Satyam and Tata Motors among the major
losers. Infosys, Wipro, HDFC Bank and ICICI Bank closed with marginal losses.
ICICI
Bank was a major gainer among front liners with the stock shooting up more
than 4 per cent. The Bank's ADR has seen a major rally over the last month
after its third quarter results and is quoting at $22.5 currently. This translates
to a per share equivalent of Rs.489, or a 25 per cent premium to the domestic
price. This is significant in the light of the proposed sponsored ADR issue
which has already been cleared by FIPB. The
other major winner among Nifty stocks was Bharti Tele, the leader in GSM mobile
telephony. The stock saw a major breakout after range-bound moves over the
last couple of weeks, gaining more than 4 per cent. Analysts have been talking
about Bharti as one of the major beneficiaries of the ongoing consumer boom.
Aggressive roll out in new circles and increase in average usage by urban
subscribers should see the company maintaining the growth momentum. ONGC
witnessed a block deal valued at Rs.749 crore. Reliance Infocomm sold the
shares issued to it at the IPO to FII's. Investment by Reliance Infocomm in
the ONGC IPO had come up as a contentious issue in the ongoing battle within
Reliance. The stock lost more than 1 per cent. Aluminium
major Hindalco cut prices by Rs1,000 per tonne, thereby passing on the excise
duty cut to consumers. Reliance announced marginal cut in PTA prices while
keeping polymer prices unchanged. Tyre manufactures have also reduced the
prices following excise reduction. Tyre stocks MRF and Apollo gave up part
of their gains over the last two days. Cement
stocks closed positive on the back of increase in February shipment volumes
reported by ACC and on news that they may consider a price hike in the near
future. ACC also plans to add an additional capacity of 2 million tonnes over
the next 6 months. Gujarat Ambuja reported more than 10 per cent drop in February
volumes yoy. Bharat
Forge surged after its board decided to increase FII limit to 40 per cent,
stock split of 5:1 and plans to raise $300 million to fund global expansion
plans, mainly in the US and China. Mid-cap
action
The CNX mid-cap index gained 1.7 per cent to close at 2806. Nagarjuna Constructions
was a major gainer on reports of strong order book growth in February. Paper
major Bilt shrugged off losses of past 2 days to post more than 6 per cent
gains. Other paper stocks including Star and TN Newsprint also notched up
substantial gains. Mid cap pharma stocks led by Glenmark and Orchid posted
smart gains. Cigarette manufacturer GTC continued its rally. Sugar stocks
bounced back led by Sakthi Sugar, which gained ahead of its board meeting
to decide on a preferential allotment. Mid-cap steel stocks led by Ispat Industries
and Essar Steel also notched up good gains on rumors of a price hike. Solectron
Centum went up on news of an order from the department of space. Bombay Dyeing,
which holds large real estate in Mumbai, continued its uptrend started after
news of FDI in real estate sector. Asian
markets gave up most of their gains notched up over the last few days, Japan
and Singapore being the notable exceptions. Japanese markets are at an 8 year
high. European markets have opened weak. US markets would closely follow Greenspan's
statements on future growth and inflation levels as well as oil prices. Market
breadth was very positive today reflecting the action in mid-caps.
This may remain the theme for the remaining two days with action limited to
the mid-caps while the frontline stocks look to consolidate. Disclaimer:
The author doesn't have any position in the stocks specifically mentioned
above at the time of writing this article. This analysis/report is only for
the purpose of information and is not an investment advice. Readers are advised
to consult a certified financial advisor before taking any investment decisions.
While efforts have been made to ensure the accuracy of the information provided
in the content the author or publisher shall not be held responsible for any
loss caused to any person whatsoever. Other
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