Correction: Indian Market Ends Volatile Session Higher

The Indian market rebounded a little on Tuesday after fairly high expectations on investments, taxes and policy impetus in the run-up to the budget led to a steep fall in the previous session.

While favorable global cues, fund buying, hopes of inclusive growth following the huge dollops of stimulus unleashed in the budget and realization that disinvestment could be done in a phased manner lifted sentiment, caution ahead of the upcoming earning season and a not- too- encouraging global picture restricted big gains.

In a significant development, Moody's Investors Service said on Tuesday that the FY10 budget is clearly a growth-oriented budget and is broadly consistent with a stable outlook on its sovereign ratings.

After trading choppily in a range of 14,252-14,001, the BSE Sensex finished at 14,170, up 127 points or 0.90%, while the S&P CNX Nifty rose 36 points or 0.88% to 4,202. The broad-based BSE 500 index rose 0.72% and the mid-cap index advanced 0.92%, but the small-cap index ended down 0.33%.

The market breadth on the BSE was fairly negative, as decliners outnumbered gainers by 1463 to 1070, with 96 stocks closing unchanged. Sector-wise, auto and FMCG stocks closed with notable gains, but public sector and oil/gas stocks ended sharply lower.

ITC(up 6.77%), Jaiprakash Associates(up 6.65%), Hero Honda Motors(up 5.80%), Mahindra & Mahindra(up 5.64%), Grasim Industries(up 5.35%) and ACC(up 5.34%) were the top gainers.

On the other hand, Reliance Industries fell 2.02%, Tata Power and ONGC declined around 1.9% each, Reliance Communication fell 1.73%, Tata Motor moved down 1.24% and Infosys ended down 1.18%. SBI, Hindustan Unilever, NTPC, DLF, Hindalco and HDFC Bank also ended in the red.

Auto stocks saw sharp gains after the government reduced additional excise duty by Rs 5,000 per unit on cars with an engine capacity of 2,000cc and more and cut the duty on petrol-driven trucks to 8% from the present 20%. Maruti Suzuki gained 4.34%, Ashok Leyland advanced 4.27% and Bajaj Auto added 3.59%.

FMCG stocks received good buying support on hopes of improved demand after finance minister Pranab Mukherjee's budget emphasized rural growth and development by increasing allocation to various state-sponsored schemes.

No changes in excise duty levied on cigarettes,the proposal to implement GST by April and defensive buying from funds also helped these stocks rally. Marico Industries surged up 12.68%, Britannia Industries jumped 4.41%, Nestle rose 2.96%, Colgate Palmolive added 2.60%, Tata Tea moved up 1.25% and Dabur India edged up 1.13%.

Select capital good stocks like Crompton Greaves, Alstom Projects and Larsen & Toubro,consumer durable stocks such as Blue Star and Gitanjali Gems, infrastructure stocks like GMR Infra, Gammon India and Nagarjuna construction also ended with notable gains.

Wipro and TCS rose, while Infosys ended down after the government abolished the Fringe Benefit Tax and extended the tax holiday to the software export units by another year. Pharma stocks such as Sun Pharma, Piramal Health Care and GlaxoSmithKline Pharma ended higher after the budget increased government spending on healthcare and reduced customs duty on certain life-saving specified drugs and heart devices.

Publisher Deccan Chronicle fell 1.44% and HT Media declined 2.23%, but Jagran Prakashan gained 2.57% after the finance minister extended the stimulus package for the print media by another six months till 31 Dec, 2009.

Tech Mahindra rose 1.54% after the company law board authorized Satyam to allot fresh shares on a preferential basis to Satyam's new owners. Bharti Airtel rallied 3.48% after market regulator SEBI exempted MTN from making an open offer, as the proposed merger deal between the two companies would only be in the form of global depository receipts.

McNally Bharat Engineering jumped over 4% after it bagged an order worth Rs 165 crore from Tata Project for engineering related works. Reliance Industries fell 2.02%, while RNRL rose 2.65% after the Supreme Court posted the gas supply dispute for hearing on July 20.

JSW Steel ended marginally down after it received shareholder nod for raising around Rs 4,775 crore through qualified institutional share placement. Infrastructure Development Finance Company added 1.31% after its managing director and CEO Rajiv B Lall sold 4.50 lakh shares of the company at Rs.140.01 per share in an open market transaction. Tata Steel ended up 0.42% after its June steel sales from Indian operations rose 19% year-over-year.

Elsewhere, the other Asian markets closed mixed amid bargain hunting and concerns over the state of the global economy, European stocks rose modestly following a late recovery on Wall Street Monday and the U.S. stock futures were little changed.

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