Markets ecstatic, now look for dark clouds

Dalal Street is over the moon. While the Finance Minister’s revised turnover tax rates came too late in the trading day to make much of...

Dalal Street is over the moon. While the Finance Minister’s revised turnover tax rates came too late in the trading day to make much of a difference, brokers feel there will be a short-term rally. Particularly as day traders — who were badly hit by the earlier tax proposal — are expected to now resume purchases.

‘‘We expect long-term, stable and retail inflows into both mutual funds and the broader capital markets,” says Ajay Bagga, CEO of Kotak Mahindra AMC. At the same time, concerns over monsoons continue to worry the market. Prime Minister Manmohan Singh said in the Parliament that the monsoon has been below normal, mainly in northwestern states.

Stocks spurted in the last ten minutes of the trade after Finance Minister P Chidambaram announced his changes in the proposed tax on transactions on stock exchanges. The Sensex spurted up by 82 points after the news; at close, this gain was averaged out to a 36-point rally. The Sensex was close to its two-month high of 4,993.76, yet off the day’s high of 5,041.19. The NSE S&P CNX Nifty index gained 15.30 points to end at 1,581.40.

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Volumes remained low, but are expected to rise following the clarification. ‘‘This clearly shows that the FM is concerned about the capital market. All market participants are happy,” says Mohan Vijan, chairman, BSE Broker Forum.

According to Bagga, ‘‘The differential turnover tax rates, the exemption of debt transactions and the extension of capital gains exemptions to equity mutual funds will have a very positive impact on market sentiments,” he said.

Tata Steel ended higher on fresh buying interest towards the close of the session. Tata Power also ended higher on sustained buying interest.

HDFC firmed up towards the close of the session on reports that the company has bought out Tata Consultancy Services’ 50 per stake in their BPO joint venture Intelenet Global Services for Rs 161 crore.

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Heavyweights State Bank of India, Reliance Industries and ONGC also contributed significantly to the gains of the Sensex.

Public Safety Minister Gary Anandasangaree said the designation gives law enforcement “enhanced powers to combat a group that has instilled fear through violence and intimidation”.

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