Dalal Street greets FM with a rally of 89 points

‘‘The markets are waiting for a clear message from the new government. They will be more positive if the government spells out its policies. But till the budget is out we will see more volatility,’’ says Sanjay Sachdev CEO of IDBI Principal Mutual Fund. Foreign funds purchased shares worth $48 million in two sessions of Friday and Monday. They pulled out $738.5 million from the Indian markets in the month of May 2004 after a steady inflow of funds for a year and a half.

Said BSE broker Pawan Dharnidharka, “Hopes that the finance minister’s visit would convince foreign funds to stay invested prompted investors to buy across the board in stocks on Wednesday.”

According to brokers, the finance minister is expected to convince the FIIs that the new government is committed to sustaining high growth and attracting foreign capital.

In a video-conference with the FIIs from Delhi on Tuesday, Chidambaram assured FIIs that the UPA would pursue economic reforms, contain government deficit and continue to encourage both FDI and portfolio investment by FIIs. Though fears of a further rise in the global crude oil prices weighed on the sentiment, political worries continued to nag the marketmen for the most part of the last month. The UPA government’s common minimum programme — announced last Thursday — disappointed investors as it indicated nothing positive for the market while confirming that there could be a slowdown in the economic reforms process.

“While the document carries a visible leftist bias, most of the proposed policy measures have been as expected. CMP promised continuation of the food and fertiliser subsidies. With agriculture sector being the focus subsidies would be targeted at marginal farmers and farm labourers,” Dharnidharka said.