Corporate India wants quick action on promises

The President of All India Association of Industries (AIAI), Vijay Kalantri, said the government has not specified from where it was going to get Rs 28,000 crore for spending in infrastructure sector. “The private and foreigninvestment would flow in only after government invests some funds from its own pocket,” he said.

A buoyant FICCI President K K Modi said: “We were expecting an announcement on buy-back of shares for so long. It will improve the market sentiments.” While the PM repeated that buy-back of shares will be allowed, he did not specify when and whether the shares bought back by the companies will have to be extinguished or will be sold back to ordinary shareholders at a later date.

There was also a note of pessimism among certain industrialists. “We have been hearing that the government will give the green signal for buy-back and free the ceiling on inter-corporate investments for the last three years now. We hope that it should not face the same fate as Tata’s airline project,” said a Mumbai-based industrialist.

The stock brokers said that the announcement would help Sensex to rally at least by 100-150 points on Monday. The share buy-back announcement will definitely help stop the fall in the marketindices.

In fact, share prices shot up in unofficial kerb deals on the Bombay Stock Exchange (BSE) following PM’s announcement. On the kerb deals, while Reliance was quoted higher at Rs 112.50 against Friday’s official close of Rs 107, SBI was quoted at Rs 161 against Rs 156, ITC at Rs 715-716 against Rs 708, Satyam Computer at Rs 570 against Rs 561.50 and Zee Tele at Rs 667.50 as against Rs 656 in the afternoon. Said Securities and Exchange Board of India (SEBI) chairman D R Mehta, “It is an excellent package. It is something the market has been eagerly waiting for.

The former president of BSE, M G Damani, was of the opinion that the announcement by the PM would help to revive the market. “Though I wish it had only come earlier. The mood of the market is so bearish that the announcement would fail to bring in the needed impact," he said.

"The buy-back permission should bring back buoyancy on the capital market," said a institutional broker and added, "full impact can be seen only after government’snotification of the proposal." The kerb activity was, however, confined only to a very few counters, he added. Adds an NSE broker: "The market has been starving for good news. The prime minister’s announcement is actually a statement of intent. We only hope it gets translated into an action plan. Most importantly we need the legal infrastructure in place before the announcements can be translated into action plans."

The stock brokers as well as finance officers of corporates wanted more specific details on buy-back. “The announcement on buy back is devoid of specifics. There is no news as to when it would be implemented. The announcement per se is not the sufficient reason for the market indices to move up. However, some of the other announcements on insurance, demat trading and private airports are a cause for excitement," said Bharat Shah of BSE.