The Hindu Business Line : Markets pare early losses as hopes of Govt survival rise

Mumbai, July 8 Indian equities recovered part of their intra-day losses in the afternoon session as news trickled in that the Government may survive with support from the Samajwadi Party.

In the early session, BSE Sensex shed over 400 points after Left parties announced their decision to withdraw support to the UPA Government. Brokers said weak global markets also had dampened market sentiment in the morning.

“During the early trade, the market fell after Left Parties said that they will withdraw their support to the Government but it recovered after the Samajwadi Party said that it will vote in support of the Government,” said Mr Madhukar Sheth, BSE Member.

Marketmen were divided on whether the Government will now go ahead with some of the economic initiatives which the Left had been opposing all along.

“The Government will be more aggressive with the economic reforms now with the support coming in from the Samajwadi Party and could pave the way for passing of some important bills like the PFRDA Bill,” said an analyst.

However, there are others who believe that with election due next year, UPA may go slow on sensitive decisions.

“In the election year the Government may not be very aggressive on sensitive issues like SEZ, though it has come out with a rehabilitation package,” the analyst said.

The Government may face some pressure from its new ally, as the Samajwadi Party has reportedly made conditions for its support.

“Samajwadi Party has an agenda in the oil & gas sector which is going to be negative for private companies,” said an economist with a Mumbai-based brokerage firm.

The benchmark index finally closed 1.30 per cent or 176 points lower at 13,349. Nifty closed one per cent lower and just below the 4000-level at 3988. FIIs were yet again net sellers of equities worth Rs 326.27 crore. The domestic institutions were buyers of shares worth Rs 427.27 crore.