Sensex ends higher, auto stocks gain on budget tax sops

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The Sensex rose on Monday, with auto stocks leading the gains after the finance minister proposed excise duty cuts to boost sales hurt by a slowing economy.

The gains were modest as the interim budget by P. Chidambaram largely stuck to expected lines, delivering on its fiscal deficit commitments by containing expenditure. It lacked any major policy announcements and limited itself to tax sops for some industries.

“Other than a few tax cuts, I don’t see any major measure on the policy front, which was technically not even expected. The budget was exactly what it was anticipated and there were no surprises. So, investors did not take a larger bet based on that,” said Hansal Thacker, director at Lalkar Securities.

Defensive stocks like technology and pharma would continue to attract interest, he added.

The Sensex closed 0.48 per cent higher at 20,464.06, while the broader Nifty closed up 0.41 per cent at 6,073.30.

Auto shares rose after the finance minister proposed excise duty reductions on small cars, two-wheelers, commercial and larger vehicles in the interim budget for 2014/15. Two-wheeler maker Hero Motor Corp gained 1.83 per cent, while utility vehicle maker Mahindra and Mahindra rose 2.62 per cent.

Bank stocks also rose, with HDFC Bank gaining 1.34 per cent, while ICICI Bank was up 2.09 per cent, tracking positive sentiment from the government’s planned borrowing and fiscal deficit targets and infusion of $1.8 billion into state-run banks.