Bulls stage rally, Sensex up by 123 pts

The statements of Prime Minister A B Vajpayee and Finance Minister Yashwant Sinha about further economic reforms and assurances to multinational companies also boosted the market sentiment. The reduction in CRR and global rating agency Standard & Poor’s decision toretain India’s `stable’ rating also added to the bullish fervour.

Reflecting the upbeat mood of the market, backed by both political and economic reasons, Sensex (30-share BSE sensitive index) shot up by 123.41 points to close at 3,963.81 points. Other stock exchanges also remained bullish. However, trading on the NSE was hit by a major software snag.

Foreign institutional investors (FIIs) were active in the market. FIIs reportedly placed buy orders at the counters of Wipro, Philips, Bata, German Remedies, Glaxo, ITC, Britannia, Godrej Soaps, Castrol, HLL, Telco, Smithkline Pharma, ABB, Bajaj Auto, Bhel and Burroughs Welcome. Stocks like Software Solution, BFL Software, Nestle, Arvind Mills and Leading Edge hit the upper end of the circuit on the BSE on continous bouts of buy orders.

“There was a feeling earlier that the BJP government would be conservative, but now they have made some positive statements about multinationals,” said Dhiren Sanghavi, director of Sanghavi Brothers Brokerage PvtLtd.

“The more aggressive buyers should be in the market next week,” said another broker. Foreign funds were active buyers in multinational stocks especially in the pharmaceutical and software sectors, traders said. “The market looks set to cross the 4,000 mark this week,” said Ajay Srinivasan, managing director at Prudential ICICI Asset Management.

While the market has labelled the finance minister’s statements as positive, there are still some question marks about the implementation of his policies. The BJP government faces a critical vote of confidence in the lower house of parliament on March 27 and 28. “I think the vote will go through, but what really needs to be seen is what happens after the government gets down to business,” said a fund manager. The close of the financial year on March 31 is also expected to buoy share prices as institutions will be under pressure to show a better performance in their books, traders said. “There is going to be propping up of prices at the year end bymutual funds and institutions,” Srinivasan said.