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How stocks reacted to the talk

K.S. Badri Narayanan

CHENNAI, Feb. 28

A look at the narrow movement of the Bombay Stock Exchange's Sensex (a market breadth of just 46.94 points between the Sensex's high of 3316.74 and the low of 3269.80), suggests that the market was indifferent to the Budget. However, a close look at the individual stock price movements shows the reaction was immediate to the Budget announcements.

Take for instance, Apollo Hospitals. The Finance Minister announced tax sops to hospitals at 11.25 a.m in his Budget speech. The stock, which was ruling at Rs 107.80 at that time, improved to Rs 108.50 a minute later and in next five minutes reached the level of Rs 112.50. Incidentally Apollo Hospitals closed the day at Rs 112.50 on the BSE.

Similarly, Ion Exchange, which stands to benefit from the incentives provided to companies manufacturing water treatment, rose to Rs 23.50 a minute after the announcement from Rs 23 (at 11.45 a.m.) and jumped to Rs 25.20 five minutes later. Ion Exchange closed at Rs 24.

Similar actions were seen counter such as Saregama India, Tips Industries (after the announcement of cut in excise duty on pre-recorded audio CD), Indian Hotels, EIH and Hotel Leela Venture (Sops for hotel industry).

However, the most-sought after stock in recent times, State Bank of India, reacted late to the announcement. At 12.26 p.m., Mr Jaswant Singh, said the Government would allow foreign investors to raise their stake in private-sector lenders while keeping the 20 per cent limit on public sector banks. The stock ruled around Rs 300 levels and it took more than five minutes for the investors to react to the proposal. The reaction was however, more, adverse as the stock slumped over five per cent to close at Rs 285.75 on the BSE.

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