Markets cheer FM’s budget austerity talk

Jaitley’s comments propel Sensex to high of 25,841; roadmap for economic revival in budget eyed

NEW DELHI: The party is on on Dalal Street and with heavy fireworks.

After three days of continuous bull run, markets hit new lifetime highs on Wednesday as finance minister Arun Jaitley’s warning against “mindless populism” added to the optimism that the Union Budget next week would outline steps to revive the economy. Good news on the economic front led by an uptick in manufacturing in June, signs of a pick-up in auto sales, sustained foreign inflows and global cues also aided sentiments.

The 30-share benchmark Sensex closed at a new high of 25,841.21, gaining 324.86 points, or 1.27%. The index had hit a record high of 25,864.53 intraday. In straight four sessions, it has zoomed 778.54 points or 3.11%.The 50-share Nifty also rose 90.45 points, or 1.18%, to a new closing peak of 7,725.15 after touching an intra-day alltime high of 7,732.40.

“If you indulge in mindless populism you burden the exchequer... It does not work.,” Jaitley had said on Tuesday.

“This is primarily a budget expectation rally. People are hoping to see some real policy reforms in infrastructure, power and taxation,” said Vikram Dhawan, director of equities at brokerage Equentis Capital.

Major Sensex gainers included Sesa Sterlite (up 4.4%), NTPC (up 3%) and BHEL (up 2.8%).

All the 12 sectoral indices closed with gains led by metal (up 2.01%), healthcare (up 1.88%) and power (1.93%).

“The government is giving the right messages and the market has taken it in full spirit. We may not see all announcements in one shot in the budget, but the messages between the lines are more important,” said Jagannadham Thunuguntla, research head, SMC Global Securities.

Foreign investors, too, continued to play a key role in the pre-budget rally. According to Sebi data, they had picked up shares worth 856.35 crore as on Tuesday. Analysts said a further uptick in stocks will now depend also on how the government tack- les soaring food inflation spurred by a shortfall in annual rains.