The Hindu Business Line : Markets waiting with bated breath — Sensex ends on positive note, gains 32 points

ELECTIONS 2004, anticipated by many as an easy win for the NDA a month ago, has evolved into a thriller with a nail-biting end. The financial markets are hardly breathing, in anticipation.

Market players and industry watchers, usually eager to crystal gaze, are reluctant to even hazard a guess as to the direction the indices would take on Thursday. Brokers and analysts, who rubbished the validity of exit polls earlier, were stunned by the Andhra Pradesh Assembly election results and are now taking stances that are even more pessimistic than the predictions of exit polls.

"Even on Budget-eve, the market usually has some sense of what will be announced, unlike this election," said a broker.

Financial markets are convinced that if a non-NDA government comes into power, the downward rally could continue for at least 3-6 months. "It is an emotional event. Markets will move ahead in three months or so, but the immediate impact might be severe," said Mr Ramesh S. Damani, a BSE broker.

Counting would be well under way by the time the market opens and early results would sway the opening bell.

Depending on the results and the possibility of a hung Parliament, markets could open with big gaps on Thursday and Friday as well, according to Mr Maulik Sharedalal, Kaji and Maulik Securities.

The stability of the new government and the confidence that the economic reforms would continue will also be a determining factor for continued foreign investments.

"In case of a hung Parliament with no group having a clear mandate to rule, the ensuing political instability will be viewed as a negative development by both domestic and foreign investors," said Mr Sivasubramanian K.N., Senior Vice-President & Portfolio Manager - Equity, Franklin Templeton.

The market sentiment tomorrow is expected to be a direct variant of the number of seats the leading party would win. "Anything below 240 seats would be a bad day at the bourses. The markets are expecting between 230 and 240 seats for the leading party," says Mr Damani.

If the trends predicted in the exit polls are bucked and NDA ends up getting more than 260 seats, markets would go through the roof, according to brokers. The stock market continued to be volatile today but unlike the last three days, the Sensex ended on a positive note. Bargain hunting on blue-chips ensured that most of the index heavyweights, other than HDFC, bounced back. The Sensex gained 32 points to close at 5358. The S&P CNX Nifty gained 0.69 per cent to close at 1711. Volumes on the NSE also crept up to 24.75 crore, up by over 2 crore from Tuesday.

The rupee today closed almost unchanged from Tuesday's levels of 44.38/40 against the dollar. On Tuesday, the domestic currency had lost as much as 34 paise to touch a four-month low. Today, FIIs were believed to be buying dollars in the foreign exchange market in order to exit from the Indian bourses.

Brokers say that today's trading was buoyed by slight hopes that the NDA could come back to power. Tomorrow is a different game altogether, as Mr Sharedalal says, "you are better off buying a lottery ticket."

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