Dalal St cheers Chidambaram with 162-pt rally

Dalal Street gave a thumbs-up to the return of P Chidambaram as the new Finance Minister with the benchmark BSE Sensitive Index (Sensex) reg...

Dalal Street gave a thumbs-up to the return of P Chidambaram as the new Finance Minister with the benchmark BSE Sensitive Index (Sensex) registering a scintillating 162-point rally. Unlike last Monday (when the Sensex tanked by 565 points), stocks shot up today after Prime Minister Manmohan Singh, who launched India’s economic restructuring in 1991, named Harvard-educated Chidambaram as finance minister in his 67-member Cabinet.

Blue-chips rose on hopes that Chidambaram’s appointment would restore confidence among foreign investors, who have sold a net $720 million worth of Indian shares over 13 straight sessions till May 19, 2004. “The market moved largely on account of the comfort level it has with Dr Manmohan Singh and P Chidambaran on the finance side,” said Sashi Krishnan, CEO, Cholamandalam Asset Management Company.

Said S A Narayan, managing director, Kotak Securities: “With two professionals taking over the post of CEO and CFO, I would say the air of uncertainty is over.”

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While stocks rose almost across the board, tech stocks led the gains on huge buying on hopes that the government would continue to support the IT sector. Trading in positive territory throughout the session, the Sensex ended with a solid gain of 161.66 points, or 3.26 pc, at 5,123.23.

The benchmark index, which has gained 191.12 points in the last two trading sessions, has regained all its losses since the Black Monday. The Sensex had lost 565 points last May 17, 2004, after the Left parties, the key allies of the Congress-led UPA government, said the new government has to do away with the policy of divestment of public sector units (PSUs). From its close of 4,505.16 on May 17, 2004, the Sensex has gained 618.07 points, or 13.71 pc.

The NSE S & P CNX Nifty Index was up 48.65 points at 1,608.85 today.

Chidambaram carried on the reforms process as finance minister in 1996-97 under the then United Front government, and is the favourite of the stock market fraternity after he introduced a “dream budget” in 1997, in which he lowered import tariffs and slashed tax rates to boost tax compliance.

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Investors are now keenly awaiting the common minimum programme (CMP) of the coalition government. The CMP has proposed to bring about a stable structure on direct taxes while efforts would be made to increase collections through greater compliance. The draft CMP proposed that divestment would be taken up on a case-to-case basis. Power sector pivotals Reliance Energy (up 11.23 pc to Rs 580.25) and Tata Power (up 5.48 pc to Rs 308.90) gained ground on fresh buying interest on hopes that the reforms in the power sector would continue.

Tech pivotals Infosys Tech (up 8.46 pc to Rs 5,319.20), Satyam Computer (up 8.31pc to Rs 328.30) and Wipro (up 6.62 pc to Rs 1,609.40) firmed up on hopes that the new government would continue to encourage the IT Industry. Heavyweights State Bank of India (up 4.75 pc to Rs 540), Reliance Industries (up 3.23 pc to Rs 453.60) and ITC (up 2.09 pc to Rs 918.45) also contributed to the gains of the Sensex.

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