Markets react to mini Budget, margin trading

A deluge of positive news pushed the key benchmark indices to record levels on Thursday, with the benchmark 30-share Sensex vaulting a stagg...

A deluge of positive news pushed the key benchmark indices to record levels on Thursday, with the benchmark 30-share Sensex vaulting a staggering 151.52 points to finish at a fresh all-time closing high of 6,108.54 points. Today’s surge in the Sensex is one of the biggest gains the index has witnessed in recent months.

Sectors like cement, auto, information technology, auto and telecom climbed sharply on frenzied buying by traders and select foreign institutional players. The bull frenzy was also aided in the dying minutes of the day’s trading by the government’s announcements of a series of duty sops to various sectors in what virtually turned out to be a mini Budget. The equity markets started on a buoyant note following the announcement of the introduction of margin trading and securities lending by the Sebi on Wednesday, post market hours.

Along with that, the reduction in custom duties for items like non-farm goods, coal, power projects, electricity meters, mobile phones, computers, aviation fuel, electrical appliances and bulk drugs on Thursday also perked up the rally.

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The strong quarterly earning numbers announced by Hughes Software was the icing on the cake. The market was further bolstered by Disinvestment Minister Arun Shourie’s comments on Thursday that the government will go ahead with its privatisation programme in ONGC and Gail, despite the prospect of early general elections. Nocil, whose petrochem and plastics businesses are to be acquired by Reliance, was also up sharply by 5.62 per cent, finishing the day at Rs 26.30, off the day’s high of Rs 29.75. In the five trading sessions of 2004 so far, FIIs have parked Rs 1,363 crore.

The Sensex opened at 5,992.10 points, buoyed also by overnight gains seen on the Nasdaq, compared to its previous close of 5,957.02 points. In late trades, the market climbed sharply to hit an intra-day high of 6,118.62 points, with the announcement of the tax cuts.

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