The Hindu Business Line : Markets recover on inflation, UP results

Mumbai May 11 The stock markets ended marginally higher on Friday as news of lower inflation figures and of the Uttar Pradesh polls delivering a clear mandate trickled in, reversing the fall of the indices in the early hours of trade.

The Sensex opened weak, tanking by nearly 217 points or 1.5 per cent, following weakening global market trends, but ended the day 25 points higher.

On the National Stock Exchange, the Nifty ended 9.85 points higher at 4,076.65. It had touched a low of 3,981.15. The early hours also saw some apprehension on what the inflation figures would hold.

Economic Reforms

But by noon, lower inflation rate was reported for the second week in a row at 5.66 per cent. There was also a 12.9 per cent year-on-year rise in industrial production for March 2007, up from 10.8 per cent for February 2007.

The market was rather divided on whether the clear win of the Bahujan Samaj Party led by Ms Mayawati in Uttar Pradesh, the largest State by population in the country, helped to shore up the stock markets. But, by and large, the impact appeared to be positive.

"Stability and certainty are positive features, although it is definitely a setback for the Congress party, with its commitment to economic reforms and development," said a market analyst.

Impact

A distinct feature of Friday's trade was the rise in sugar stocks. Most of the sugar companies have a prominent presence in Uttar Pradesh. Sugar stocks rose by between 7 per cent and 11 per cent. Bajaj Hindustan gained nearly 8 per cent, while Renuka Sugars rose by 10.80 per cent and Dhampur by over 7 per cent.

The State election results may also impact companies such as Reliance Energy, which has planned a large power project (more than 3,570 megawatts) at Dadri at an investment of over Rs 11,000 crore. The REL stock fell by 1.2 per cent on the BSE during the day.

The top index gainers during day were Bajaj Auto (following news of its demerger), Reliance Communications, NTPC, SBI, TCS, Infosys, Ranbaxy, ICICI and Reliance Industries.

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