Bargain hunting helps Indian market end four-day losing trend

Wednesday, 04 February 2004, 20:30 IST
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MUMBAI: India's blue-chip share market index finished in the positive zone Wednesday, snapping a four-day losing streak, as institutional investors resorted to bargain hunting in heavyweight equities at lower levels. Dealers said that the market opened on a positive note after sliding as much as four percent in as many consecutive sessions. It surged higher in the intra-day trade on bargain hunting in shares of cement, automobile and steel companies. The stock market barometer 30-share Bombay Stock Exchange sensitive index or Sensex finally ended at 5,756.76, representing a gain of 135.78 points or 2.42 percent over its previous session's close. The index dropped over one percent Tuesday with investors rushing to square up positions on heavyweight counters after the presentation of the interim budget that fell below their expectations. Finance Minister Jaswant Singh, who presented an interim budget, or vote-on-account, for fiscal 2004-05 to Parliament sought to add strength to the "feel-good-factor" by increasing the economy growth projection for the current year. Presenting a 4.6-trillion ($101 billion) federal budget, Singh said the Indian economy was likely to post a growth of 7.5 and eight percent in the current fiscal ending on March 31 as the macro-economic situation had vastly improved. The government unveils its annual budget every year at the end of February. In view of early election likely by April, it came up with a vote-on-account to seek parliament's nod for general expenses in lieu of the normal budget. The finance minister, however, extended the long-term capital gains tax on listed shares for three years to boost the market sentiment. In the federal budget for 2003-04 presented in February last year, Singh had announced capital gains tax benefit for equity acquired between March 1, 2003 and March 1, 2004 were valid for a period of one year. Global rating major Standard and Poor's said Wednesday India's interim budget for fiscal year beginning April 1 indicated a greater determination of the government to curb fiscal deterioration. "Despite some modest pre-election tax concessions, the outlook for reducing the deficit appears more upbeat than it has in recent years," said the rating agency. Standard and Poor's, however, said its credit rating on India were constrained by the high public debt burden and "fiscal inflexibility," with the consolidated government deficit at more than nine percent. Analysts say although the market managed to close with smart gains Wednesday the overall investors' sentiment continues to be cautious and that shares may get back into range-bound trading mode in the sessions ahead. "Investors were looking forward to the interim budget to provide some positive trigger for enlarging position in heavyweight stocks but their expectations were not met," said a broker with the Bombay Stock Exchange. "So, the mood in the trading ring continues to be cautious and, at this stage, it would be wrong to assume that the market has finally charted a recovery course," the broker added. "Today's (Wednesday) recovery was mainly a result of bargain hunting in shares that had come down to sharply lower levels in recent trade on large-scale profit taking by institutional investors." In the old economy sector, Tata Steel, India's largest private sector steel maker, gained 7.8 percent to touch 416.10 triggered by talks that steel makers were expected to hike prices across all product categories. Tata Motors, one of India's leading passenger cars and commercial vehicles makers, rose 6.3 percent to 544.55 after Standard and Poor's raised its long-term corporate credit rating on the company. The upgrade in the rating is based on a sustained improvement in the company's business and financial profile since it posted losses in 2001 and 2002. Other major gainers in the sector included Hero Honda Motors, Bajaj Auto, Associated Cement Companies, Gujarat Ambuja Cements, Larsen and Toubro, State Bank of India, Reliance Industries, and Hindustan Lever Limited. In the technology sector, Hyderabad-based Satyam Computer ended 4.3 percent higher at 305 and Infosys Technologies, the country's largest listed software exporter, closed with a gain of nearly three percent at 5,369.35.
Source: IANS