While the market broadly welcomed announcements to boost various sectors and the government's measures to specially support the capital markets, the proposal to impose a 10 per cent surcharge on corporate tax hit the sentiment briefly. However, the sharp rise was limited to A and B group stocks in the software, pharma and housing finance sectors.

As many as 33 specified scrips, particularly software, pharma and some Indian majors hit the upper circuit breaker after exhausting the daily limit (trading was suspended in these scrips were suspended as their prices exceeded the 8 per cent limit).Over 160 counters from B1 and B2 groups also hit the upper price band on the BSE.

Sensex showed volatile movements and kept the marketmen on tenterhooks. After opening at 3301.13, the index fell to 3215.69 at one stage but later rallied to close at 3399.63 points with a gain of 165 points. At the National Stock Exchange (NSE), S&P CNX Nifty index showed similar volatile movements and closed at 981.30 with a gain of 40 points. The turnover on the BSE jumped to Rs 2039.96 crore while NSE reported a turnover of Rs 2977.54 crore.

During the mid-session, the market reacted negatively due to selling pressure from operators and Sensex dropped to the low of 3215. However, the sentiment turned bullish thereafter with players buying heavily in software and pharma shares. Among the measures that boosted the sentiment were Sinha's plan to exempt dividend income received from mutual funds and the Unit Trust of India (UTI).

"We may see more money flowing to mutual funds and equity markets," said Purvesh Shah, chiefdealer with KJMC Capital Markets. BSE president JC Parekh said ``The budget is oriented to give a boost to the capital market. There would be immense incentives for investors to invest in schemes of UTI and other mutual funds where investments in equities is more than 50 per cent. Further reduction of long term capital gains on shares from 20 per to 10 per cent is a welcome step.''

For the pharma sector, it proposed 74 per cent foreign direct investment with automatic approval. This boosted the scrips of Ranbaxy, Glaxo, Novartis, Dr Reddy's, Rhone Poulenc and a host of other multinational drug companies. Software shares also surged ahead following a host of sops. Most software shares including Satyam Computer Services, Software Solution Integrated, Leading Edge Systems and Pentafour Software rose to the upper end of the eight per cent price band at the Bombay exchange.

The budget also proposed significant cuts in information technology customs rates, tax incentives for software exports in the television,music and film sectors.

``Several incentives were given in the budget for various sectors which will automatically boost the capital market as shares of the respective companies would be benefitted by it,'' said P S Subramanyam, chairman, Unit Trust of India.

Marketmen were happy with the government initiative to activate the sagging stock market by bringing down the long term capital gains tax on shares and other specified assets for resident Indians on par (that is, a uniform rate of 10 per cent) with non-resident Indians and a bail-out package for the UTI.

Jignesh Shah, assistant vice president, Triumph International Finance, said there is a big list of securities which hit the upper price bands. Share broker Malini Ajit Sanghvi at the BSE said that Larsen & Toubro, Siemens, Hind Construction would be benefitted from the encouragement given to the infrastructure sector while Global Telesystems, MTNL, Sterlite, Finolex Cables and Birla Ericcson would be benefitted in the telecom sector. PunjabTractor, ITC Agro Tech would get benefit of the higher outlays of agriculture while HDFC, LIC Housing would be the beneficiaries of the incentives announced to the housing sector.