However, broking sources attribute the gains not just to the mid-term monetary and credit policy 2002-03, but a host of reasons which helped markets recover from the ebb.
According to Mr Arun Gupta, chairman of OJ Financials, a Delhi-based broking cum investment consultancy firm: The bounce-back on the bourses was a result of aggregate effect of a favourable credit policy, finance ministers support to disinvestment process, spurt in Reliance Industries as the company stumbled upon huge gas reserves and finally the relief rally which was overdue after a six day losing streak on the equity markets.
He added that the monetary and credit policy was received well by the markets. In expectation, the banking sector stocks, specially the smaller market cap stocks, had opened higher and ended the day with decent gains, Mr Gupta added.
However, Mr Gagan Banga, chief marketing officer of Indiabulls opined that the credit policy was a non-event: The steps taken in the policy, like the 25 basis point cut in bank rate, cash reserve ratio and repo
rate is not expected to help much as looking at the excess liquidity already in the system and insufficient credit off-take.
Markets did not react to the credit policy and the gains were largely due to the upward correction due for long specially in Sensex heavyweights like Reliance, Hindustan Lever and Infosys. The upward correction was due after the recent declines and the market bounced back right from start, even before the credit policy, Mr Banga said.
He added that a larger part of Tuesdays trading was non delivery-based compared to normal ratio, which is not a good sign. I believe that about 85 per cent of the trades today were not delivery-based as against the recent average of about 80 per cent. The rally may only continue for one more day, he added.
There was no effect of credit policy on the banking stocks too. These counters had opened one-two per cent higher on Tuesday and did not crash after the policy announcement, Mr Banga said.