The industry's long standing demand of protection against dumping was finally met thereby giving a big push to these company's fortunes. The budget has introduced a 10 per cent (from 20 per cent to 30 per cent) hike in import duty on paper and paper boards which would provide succour to these companies, reeling under low offtake and prices, coupled with dumping by global majors. Add to this the 8 per cent special additional import duty and the 10-12 per cent rupee depreciation, which certainly makes the paper sector an attractive investment option.

The import duty of 18 per cent coupled with the depreciation of rupee would bring the landed paper cost almost at par with the domesticprice, which is likely to spur offtake. The paper companies which for the past few years not revised their prices can now raise paper prices.

However, the punters who are betting purely on these sops should be cautious as the measures announced in the budget will not have an immediate impact on these companies' bottomline, or at least for the first six-month period ending September and may report only a marginal improvement in their bottomline. The impact of these measures will only be visible for the year ending March 1999.

Buoyed by the budget sops, the paper stocks have witnessed heavy trading activity in the past three sessions. These stocks have shot up with a corresponding increase in trading volumes. Ballarpur's scrip has zoomed by over Rs 8 from Rs 30 on last Friday to the current close of Rs 38. The volumes, too, have shot up from an average daily trading volumes of 65,000-70,000 to around 3 lakh shares. In the post-budget session, Ballarpur witnessed a trading volume of 1.05 lakh shares and thefollowing day, more than 3.5 lakh shares were traded on the Bombay Stock Exchange.

ITC Bhadrachalam, too, has witnessed heavy trading volumes in the past few sessions. Against an average trading volume of 50,000-70,000 shares a day, almost 4 lakh shares were traded in the post-budget session on the BSE. The scrip has firmed up from Rs 32 to Rs 35.35 on June 3.

However, the public sector giant, Tamil Nadu Newsprint, is likely to lose out as a result of the reduction in customs duty from 10 per cent to 5 per cent on newsprint. This would mean cheaper imports and is likely to further widen the gap between the landed cost and domestic newsprint cost. TN Newsprint's scrip has crashed from the pre-budget close of Rs 31.85 to the current close of Rs 23.85 on the National Stock Exchange.

It closed the post-budget session at Rs 26.1. On the BSE, it attracted a settlement seller freeze after it crashed from Rs 27.6 to Rs 23.05.