The benchmark indices extended yesterday's gains, opening strong ahead of Rail budget 2008, and tracking steady to firm Asian markets. Realty and power stocks rose. Reliance Energy and HDFC Bank were major gainers from Sensex pack. The market breadth was strong. 21 stocks from 30-member Sensex pack were in the green.
The market will be eyeing the Railway Budget which will be presented by Rail Minister Lalu Prasad in parliament today. As per reports, the Minister is likely to reduce both passenger fares and freight rates in the rail budget, riding a strong revenue growth and reduced operational costs. Rail fares are likely to be cut by 3 per cent to 5 per cent while freight rates for petroleum, steel and iron ore may come down by 4 per cent to 5 per cent due to reclassification of goods.
Later, the 30-share BSE Sensex was up 105.29 points or 0.6 per cent at 17,759.30. It opened higher at 17,831.456. The Sensex rose to hit a high of 17,818.52 in early trade. At day's high, Sensex gained 167.95 points.
The broader based S&P CNX Nifty was up 35 points or 0.67 per cent at 5,235.70, before it resumed flat at 5200.80 points.
The next major trigger for the market is the Union Budget 2008-09.
With general elections due in 2009, Union Budget 2008-09 to be presented on February 29, will be the last full-fledged budget of the Congress-led United Progressive Alliance government and it is therefore likely to be a populist budget. Thus, the Finance Minister (FM) is likely to provide higher allocations to several social initiatives like rural upliftment, employment, education, agricultural growth and public health.
Though populist measures will dominate the budget, FM is also expected to take steps to stimulate investment and consumption demand at a time when the economy is witnessing moderation from a solid growth last year. A reduction in personal income tax, if any, will result in increase in disposable incomes which in turn may boost demand for consumer goods.
Expectations are that the corporate income tax rate may be cut or the 10 per cent surcharge on corporate tax may be abolished. The surcharge is 10 per cent on a tax rate of 30 per cent, making the effective corporate tax rate 33 per cent. Another possibility is that of a cut in dividend distribution tax from 15 per cent to 12.5 per cent. The FM may also raise the Securities Transaction Tax slightly.
It is also expected that the FM would announce some relief packages for troubled export sensitive sectors like textiles, rubber, jewelry, leather and IT services. These sectors have been hit by rupee's surge in the past one year.
India's largest private sector firm by market capitalization and oil refinery, Reliance Industries (RIL) rose 0.21 pc to Rs 2,557.
India's largest truck maker by sales, Tata Motors increased 0.59 per cent to Rs 709.50. As per reports, US-based automaker Ford Motor Company might announce next week the sale of its luxury Jaguar and Land Rover brands to the Indian company.
Power stocks rose. India's second largest power utility firm by revenue Reliance Energy rose 3.16 per cent to Rs 1,674 after company said its board will meet on 5 March 2008 to consider buyback of equity shares of the company.
Tata Power Company was up by 1.11 per cent to Rs 1,365 followed by, Power Grid Corporation of India by 0.71 per cent to Rs 102.80 and NTPC by 0.42 per cent to Rs 204.20.
However, Reliance Power was flat at Rs 450.40.
Realty stocks were in limelight. Indiabulls Real Estate was up by 7.18 per cent to Rs 620 followed by Unitech by 2.07 per cent to Rs 390.05, DLF by 0.7 per ccent to Rs 840 and Housing Development Infrastructure by 0.73 per cent to Rs 829.60, brokers added.