BOMBAY, 3 March — On Monday there were concerns about the forthcoming budget and the BSE closed at 3,613.51. On Tuesday the Sensex jumped up 99.13 points to close at 3,712.74. The railway budget for the year 2002-2003, that announced a cut in freight rates of cement, petroleum products and steel, kept the sentiment firm for the rest of the session.

On Wednesday the market closed at 3,705.66. On Thursday when the budget was announced, the BSE Sensex fell and closed at 3,562.31. Marketmen were extremely disappointed with Finance Minister Yashwant Sinha’s “rational” budget which takes away tax benefits for higher income groups under Sec 88, imposes a 5% defense surcharge and taxes investors’ dividends. There was also a 10% tax on IT companies. The finance minister also cut the administered interest rates on small saving schemes. Hindustan Lever (HLL) leapt after the budget reduced the excise duties on cosmetics and toiletries to 16% from the current 32%. Another reason for the rise in the stock of the fast moving consumer goods (FMCG) heavyweight was a cut in excise duty on tea by 50%. HLL is a major producer of packaged tea. The emphasis on the agriculture sector is also likely to benefit HLL. ITC ended with gains after cigarettes were spared from fresh excise duty which had become more of a ritual in almost all the previous budget’s. Banking and financial sector stocks declined on profit-booking after the finance minister announced a lower-than-expected cut in interest rates on government-administered savings schemes.

Cement scrips like L&T, Gujarat Ambuja Cements, ACC and Grasim were down following the cut in customs duty on cement and clinker from 25% to 20% in a bid to check domestic prices.

Select automobile pivotals posted gains. A cut in the prices of petrol and diesel also helped the sentiment for these stocks. Effective March 1, 2002, petrol will cost about one rupee less than the current Rs. 27-31 a liter, depending on the local levy, while diesel prices will fall by about 50 paise.

Tata Tea (Rs. 181.05) rose after the excise duty on tea was cut to Re 1 per kg from Rs. 2, and the customs duty on imports was hiked to 100% from the existing 70%.

On Friday the market concluded that the budget was not as bad as it was made out to be. The BSE jumped to 3,678.75 and out of a total of 1,162 shares that changed hands, 665 recorded gains while 408 declined. About 89 scrips remained unchanged. Fund buying was primarily in Hindustan Lever and PSU shares. Morgan Stanley was said to be active in PSU shares such as MTNL, BPCL and HPCL.

Foreign institutional investors (FIIs) remained net buyers. According to the figures released by the Securities and Exchange Board of India (SEBI), FIIs were net buyers to the extent of Rs. 410.60 crore in the first four trading sessions. For the month of February 2002, FIIs remained net buyers to the extent of Rs. 1,962.68 crore.

Cement stocks recovered as the import of cement is no threat to the domestic industry. Imported cement will incur heavy transportation charges and will make it non-competitive.

Gold was at Rs. 4,960/- per 10 gms and silver was at Rs. 7,745/- per kg. US$ was at Rs. 48.66, Pound Sterling at Rs. 69.06, Euro at Rs. 42.08, UAE Dhm at Rs. 13.25, Kuwait Dinar at Rs. 157.99, Bahraini Dinar at Rs. 129.07, Saudi Riyal at Rs. 12.97, Qatari Riyal at Rs. 13.36 and Omani Riyal at Rs. 126.38.