Stocks bounce back; tech, telecom lead rally

MUMBAI, MAR 1: After Tuesday's blood-bath, sanity returned to the stock markets on Wednesday. With investors realising Tuesday's budget wi...

MUMBAI, MAR 1: After Tuesday’s blood-bath, sanity returned to the stock markets on Wednesday. With investors realising Tuesday’s budget will not have an adverse impact as originally feared, pivotals bounced back on the Bombay Stock Exchange (BSE) as shares of telecom, software, media, select FMCG and bank stocks recovered smartly, lifting Sensex up by about 195 points.

The index had fallen 5.12 per cent, or 293 points, on Tuesday on fears that the changes in the duties and taxes announced in the budget will hurt many companies. The sentiment was boosted in the wake of hectic and fresh buying by foregin funds. Even local speculators who unloaded heavily on the budget day have started building positions again.

BSE Sensex, which had witnessed erratic movements in a range of 5512.68 and 5341.61 on alternate bouts of buying and selling at the initial stages, later spurted to 5681.91 before finishing at 5642.12 with a sizeable gain of 195.14 points or 3.58 per cent against yesterday’s close of 5446.98. The BSE-100 index also recovered smartly by 157.61 points to 3450.90 from the previous close of 3293.29. The broader 50-share National Stock Exchange Nifty Index ended 57.90 points higher at 1,654.50.

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Said BSE broker Pawan Dharnidharka, “the markets had over-estimated the negative impact of the budget proposals and switched into buy mode on Wednesday when the picture became clearer.” Bank shares like ICICI Bank, HDFC Bank, Bank of Baroda and others were locked in the upper circuit filter on proposed abolition of two per cent interest tax that would reduce the burden on borrowers and help improve credit offtake, dealers said.

Though reduction in tax exemptions by 20 per cent every year in a phased manner on export earnings is likely to affect the infotech industry, shares of major software companies scored impressive gains as the proposal was unlikely to have much impact on performance of big firms. Satyam Computer soared by Rs 403.95 at Rs 5453.95 and Infosys zoomed by Rs 696.35 at Rs 9400.95. Others like Rolta, Hughes Software and HCL Technologies also hit the upper end of the circuit filter.

Telecom giants HFCL, Global Tele, MTNL, Krone Communication, Shyam Telecom, Tata Telecom and ITI were at the forefront in the rally while others like Reliance, Sterlite and Finolex too made hefty gains on heavy buying support from institutional investors. Pharma stocks, however, witnessed sustained selling pressure on the second consecutive day following lack of attention by the Finance Minister towards the sector in the budget.

“The rally in IT scrips that started off in line with sharp spurt in the Nasdaq Index last night, was enlivened by the statement of Finance Minister Yashwant Sinha that tax concessions currently enjoyed by Export Processing Zones and technology parks would continue, but units set up after April 1, 2000 will only be covered by the proposed 20 per cent tax scheme,” said a fund manager.

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In the specified group, 34 scrips including all IT shares were locked in the upper circuit filter at close. However, four of 40 negative counters hit the lower price band reflecting adverse budget proposals. Zee Telefilms was the most active scrip with a turnover of Rs 429.57 crore of the total volume of business of Rs 3689.54 crore. Zee Telefilms shot up by Rs 104.55 to Rs 1411.80, HFCL by Rs 140.40 at Rs 1895.90, RIL by Rs 6.10 at Rs 317.55, Global Tele by Rs 166.80 at Rs 2252.30, BSES by Rs 24.55 at Rs 331.70, GACL by Rs 14.35 at Rs 295, Hindustan Lever by Rs 100 at Rs 3000, MTNL by Rs 22.75 at Rs 307.65, NIIT by Rs 178.55 at Rs 2410.55 and SBI by Rs 8.75 at Rs 236.