Blue-chip equities extend gains on budget hopes
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Blue-chip equities extend gains on budget hopes

Wednesday, 19 February 2003, 08:00 Hrs
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MUMBAI: India's key share market index finished in the positive zone for the second session in a row Tuesday on hopes that the forthcoming budget would unveil pro-market initiatives such as abolition of tax on dividend incomes.

Analysts say the pre-budget rally on the bourses that started Monday is likely to gain momentum in the days ahead as institutional investors rush to build long positions on heavyweight counters ahead of the presentation of the federal budget.

Finance Minister Jaswant Singh will present his annual fiscal package for 2003-04 in Parliament on February 28.

The market barometer 30-share Bombay Stock Exchange sensitive index or Sensex closed at 3,289.09, representing a gain of 6.64 points or 0.20 percent over its previous session's close.

"The market mood continues to be bullish ahead of the presentation of the budget. The fears of Iraq war, however, continues to loom over the bourses," said a broker with the Bombay Stock Exchange.

India's annual budget is expected to focus on attracting more investors in the sagging capital market by unveiling pro-market initiatives such as abolition of tax on dividend incomes.

Bruised investors also expect the budget to strengthen the market regulatory system and pave the way for conversion of stock exchanges into corporate entity with a view to motivate household savers to put their money in shares.

Analysts say the investors' demand to exempt dividends distributed by corporate houses from income tax in the hands of the recipients is likely to find favour in the forthcoming budget.

The government's decision to impose tax on dividends last year had dampened the market sentiment and evoked strong protests from small investors.

In the old economy sector, Hero Honda Motor, the country's largest motorcycles maker, gained 2.4 percent to touch 218.05 on sustained bargain hunting after a sharp recent fall.

State Bank of India, the country's largest commercial bank, rose 0.4 percent to 309.50 and Bank of Baroda closed with a gain of 1.2 percent at 73.85 on fresh institutional buying.

Shares of banks witnessed large-scale buying on a report that the finance minister would raise the ceiling on foreign fund holdings in government-run banks to 49 percent from 20 percent now.

Consumer goods giant Hindustan Lever advanced nearly two percent to 167.75 and tobacco major ITC closed with a gain of 0.8 percent at 640.

Other major gainers in the sector included state-run Hindustan Petroleum Corporation Ltd., Gujarat Ambuja Cements, Tata Steel, Mahanagar Telephone Nigam Ltd., and ICICI Bank.

In the tech sector, HCL Technologies, a New Delhi-based software development and services, ended nearly two percent lower at 167.90 on fears that the forthcoming budget would impose tax on the earnings of software companies.

Hyderabad-based Satyam Computer fell 1.3 percent to 224.75 and Infosys Technologies, India's largest listed software exporter, closed with a loss of 0.5 percent at 4,240.70 on profit booking after recent gains.

Counters such as Polaris Software, Hughes Software, I-flex Solutions, NIIT, SSI, Digital GlobalSoft, Mascot Systems and Wipro also closed in the negative zone.



Source: IANS
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