NEWSLINKS
BUDGET 2000 LIVE!
BUDGET ON REDIFF
D&B BUDGET SPL
ECONOMIC SURVEY
RLY BUDGET
BUDGET: RUN-UP
BUDGET PROCESS
BUDGET HOTLINKS
Y2K BIZ FEATURES
INDIA & THE WTO
GOVT&ECONOMY
SPECIALS
INTERVIEWS
COMMENTARY
CREDIT POLICY
BUDGET 1999-2000
USEFUL INFO
ARCHIVES
SEARCH REDIFF

Outlook for stockmarket bright

Market capitalisation, an indicator of the growth in the shareowners' wealth, nearly doubled in the first nine months of the current financial year as a result of the share market boom, propelled by the information technology-led ''golden triangle''.

The Economic Survey 1999-2000, tabled in Parliament today, quoting the National Stock Exchange, estimates says that market capitalisation increased by 92 per cent, from Rs 4.453 trillion (10 lakhs = 1 million; 1,000 million = 1 billion; 1,000 billion = 1 trillion) the first month of the current financial year (April 1999) to Rs 8.529 trillion in December 1999.

According to the Bombay Stock Exchange estimates, market capitalisation mounted to Rs 8.033 trillion in December 1999, from Rs 4.882 trillion in April 1999, representing an increase of 65 per cent, says the survey.

The boom was attributed to the phenomenal spurt in information technology stocks witnessed in leading markets abroad and mirrored in the Indian market and two other sectors of the ''so-called golden triangle'' -- pharmaceuticals and fast moving consumer goods.

According to the survey, the factors that boosted the stock market sentiment are reduction of long-term capital gains tax from 20 per cent to 10 per cent for resident Indians, and exemption from income-tax all income of investors from mutual funds including UTI, coupled with signs of overall improvement in economic performance.

Although the secondary market has not been free from price volatility, the strong margining system and other risk containment measures could ensure the safety of the market and the payment systems, says the survey.

There are also clear signs of revival in the primary market. The passing of the Securities Laws (Amendment) Bill to facilitate introduction of derivatives trading based on stock index futures has further brightened the outlook for the stock market.

The passing of the Insurance Regulatory and Development Authority Bill, opening the insurance sector to private participation, will not only raise resource mobilisation but will also encourage foreign institutional investors, who play a significant role in the Indian stock market, according to the survey.

UNI

Budget 2000 Live! | Budget on Rediff | Dun & Bradstreet Budget Special | The Run-up
Budget Process | Budget Hotlinks | NDA Government & Economy
Ministry of Finance: Economic Survey 1999-2000 | Budget 2000 document

Tell us what you think of this Budget 2000 coverage