Markets end with modest gain; RIL, BHEL, L&T, RComm drag

07 July 2008

Markets have ended with modest gain on the back of buying support from technology, FMCG, auto, metal, banking, realty and power stocks while private oil companies and large capital goods stocks witnessed selling pressure. It started the first day of week on a stronger note and remained bullish till afternoon trade. But in late trade, due to huge sell off in major oil and capital goods stocks, it has given up entire gain and turned into flat territory.

Private oil companies like Reliance Industries and Cairn India have beaten down very badly today, which butchered indices in late trade. Reliance Ind fell nearly 5% from day's high. The main reason behind this fall in these stocks is that some reports suggest Samajvadi Party has demand for windfall tax on private oil companies in support to Nuclear Deal, which will spell doom for private oil companies like Cairn, Essar Oil and RIL. Windfall profit tax is a tax levied on oil & gas exploring companies which incur huge profits when crude prices are high.

The Sensex has slipped over 260 points and Nifty over 80 points from day's high of 13,793.39 and 4114.50, respectively. The Sensex closed at 13,525.99, up 71.99 points or 0.54%. Nifty was up 14 points or 0.35% to settle at 4030.

Biggest contributors to both indices were SBI, Infosys, ITC, Satyam, Wipro, Bharti Airtel and HUL while draggers include Reliance Ind, Reliance Comm, Cairn India, BHEL, L&T and Tata Motors.

Fresh short buildup has seen in Nifty July futures, which ended with discount of 54 points. Oil & Gas stocks like Reliance, Cairn & Reliance Petro have seen short build up and even sugar stocks like Bajaj Hind, Balrampur chini and Shree renuka seen short build up. However, IT stocks witnessed fresh long build up.

Market breadth was positive; about 1945 shares have advanced whiel 956 shares declined. Nearly 237 shares remained unchanged.