Bhel managed a recovery Thursday after witnessing a sell-off post budget over the reduction of import duty on specific power equipment.

The scrip of the power equipment company moved higher by 1.2% on BSE to Rs 208.85. It hit a high of Rs 209.25. Volumes on the counter were modest at 220,000 shares so far.

The market seems lacking specific impetus today. And some select scrips, that are being backed even to a small extent by funds or high net worth individuals, are being prodded on. In early afternoon trades, the BSE Sensex fell 17 points to 3,209. The market was also volatile, coming off early lows but failing to sustain a recovery. The market was volatile on Wednesday as well, when it came back from lower levels after witnessing a sharp fall in the interim.

Bhel's recovery follows a post-budget sell-off on the counter after import duty on specific equipment for high voltage transmission projects was reduced to 5% from 25% earlier. The reduction will bring down cost of imported equipment and will perhaps set off pressure on demand for domestic power equipment, it is reckoned. Bhel is into high-voltage equipment manufacturing and, therefore, may be impacted by the budgetary measure.

From Rs 203.65 on 3 March 2003, Bhel has gained 2.5% in three trading sessions to the current Rs 209.25. Before that, the scrip fell 7.1% in just two trading session from a 52-week high of Rs 219.35 on 27 February 2003.

Dealers say the stock remains attractive at the current level and they expect it to benefit from the Electricity Bill that is pending in Parliament.

The passage of the Electricity Bill should give a big boost to the entire power sector as it is being viewed as a comprehensive legislation . It will also enable the states and the Centre to move in harmony and coordination. It takes into account the move towards a competitive scenario, where regulators on the one hand, and private power utilities on the other, shall play increasingly significant roles. The bill provides a comprehensive yet flexible legislative framework for power development.

The budget has also been favourable to the power sector in the form of the extension of the mega power project policy to all power projects. This will allow the building of 15-20% more capacity with the same resources (within a given time frame) and will result in significantly lowering the cost of delivered power from these stations.

The thrust on infrastructure development is also a good indication for the power sector. Overall, the Budget 2003 has been good to the power sector as a whole except for the hiccup pertaining to domestic high-voltage transmission equipment manufacturers. Bhel is seen as a major beneficiary from power sector reforms.