Sensex leaps as traders
jump to conclusions
The stock market jumped to conclusions and pushed prices on unconfirmed
reports that the United Front may be willing to change its leader
and resolve the political crisis the federal government is facing.
That is why the Bombay Stock Exchange's Sensex closed higher,
gaining 35.36 points from the Thursday's close. In the intra-day
trading it recovered by over 121 points after opening low.
Brokers in New Delhi were equally hopeful and the Delhi Stock
Exchange equity index improved by over 11 points.
According to the former president of the Delhi Stock Exchange,
Ashok Agarwal, the market is hopeful that the Finance Bill would
be passed with minor changes.
Similar views were expressed by another former president of the
DSE, Arjun Kapur. However, he cautioned that should there be fresh
elections, the stock market would plunge into a prolonged slump.
After the United Front made it clear that there would be no change
of leadership, stocks fell in unofficial kerb deals.
Authorities of major stock exchanges have decided to hold official
trading on Saturday, which is normally a holiday. They decided
on this to keep the kerb deals under check in view of the fast
developing political situation.
Industry and stock market circles believe that while the economic
reforms have the backing of most political parties, the decision-making
process would be slow down if fresh elections are held.
The experts doubt whether the country can achieve the projected
7 per cent growth in the Ninth Five Year Plan period if political
uncertainty continues for long.
Capital markets bet the budget will sail through
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