Markets opened on the back of rising crude prices and a weak US market overnight, but was firm in early trades. Till noon it looked like the market would break its three day losing run and manage a small rally. Such hopes were belied as the indices took a downturn in the afternoon, possibly because of lower FII activity. Sensex closed at 6747, down a marginal 5 points and the Nifty at 2126, down 3 points. The Nifty futures discount to the spot index narrowed to 6 points.

Inflation worries continue to keep US markets down. Crude remains firm even as winter comes to an end and continues to trade around the $55 to a barrel mark. The Dow closed half a per cent down while NASDAQ lost three fourths of a per cent. Indian ADR's declined further in the general weakness in market, with the exception of ICICI Bank which ended its weak trend to close with gains of a per cent. VSNL was the major loser with losses of more than 4 per cent while Tata Motors, Satyam and HDFC Bank lost further ground.

The day belonged to private sector banking major ICICI. The stock which had gone through a correction over the last few days rallied over 5 per cent to an intra-day high of Rs407 before closing at Rs401. The bank is expected to price its sponsored ADR issue in a few days. The market expects the price to be over Rs400 as the ADR is currently quoting above this level. IPO by group company 3i Infotech may also act as another trigger for this stock.

Petroleum marketing companies had a good day with HPCL leading with gains of 2 per cent. BPCL and IOC also closed in the green. Sections of the market may be expecting a price hike after the union cabinet meeting scheduled later for the day even though the oil ministry has ruled out any price hike this month.

Steel stocks continued to rally with both Tata Steel and SAIL touching new yearly highs today. SAIL closed with gains of more than 2 per cent while Tata Steel closed in the red.

Nalco was the other major gainer among index stocks on the back of rising aluminum prices. Among the tech pack, TCS remained firm while Infosys, Wipro and Satyam closed with losses.

Reliance continued its downtrend on fresh demands for a detailed probe from some politicians. Controversies surrounding the family and bad corporate governance have taken a huge toll on the stock even as it remains relatively undervalued based on business fundamentals.

Mid-cap action
Mid-size private sector bank UTI Bank completed its GDR issue for $239.3 million. The GDR was priced at Tuesday's closing rate in the domestic market and would be listed on the London Stock Exchange. Funds raised from the issue would boost the bank's capital adequacy. The stock ended lower after opening firm in the morning.

Orchid Pharmaceuticals announced tie up with a US-based company for marketing generic lifestyle drugs which are going off patent from 2007. This is the second tie up by Orchid for the US generics market. Investors should note that revenues would start flowing in only from 2007. Prospects of such deals are exposed to risks such as future prices of the drugs and new products coming into the market. Orchid is one of the largest manufacturers of cephalosporin in the world and its recent financial performance was affected by a major drop in prices. The stock shot up more than 3 per cent before cooling off.

Crew BOS, an exporter of garments to major retail chains, decided to raise additional resources of up to $10 million through a GDR / FCCB issue. The funds are being raised for expansion plans and a foray into retailing. The stock which rallied on this announcement cooled off to close in the red.

Construction companies continue to buzz with strong order gains almost every other day. Madhucon Projects announced yet another order from the government of Andhra Pradesh for over Rs600 crore after the Rs400 crore order yesterday. Another construction company, MSK Projects, won two irrigation projects worth Rs80 crore. Both the counters posted good gains as did others like Gammon India and IVRCL. Current financials of many of these companies are not very attractive and the bulging order books would take some time to reflect in the results. Investors should guard against the market taking a reality check in these stocks maybe on the next quarterly numbers.

Rajesh Exports was another winner in the mid-cap space gaining 5 per cent in early trades. The company is an exporter of precious jewelry and had recently won contracts the Far East and Middle East. The stock has attracted a lot of attention from FII's.

The momentum in small steel stocks continued today with many of them posting one-year highs. Many of these stocks have assumed lives of their own on the back of increased trader activity. This becomes more evident since the frontline steel stocks are not attracting the same attention. It still beats many why these companies are attracting so much attention when the best steel company in the country, Tata Steel, is available at 6 times its next year's earnings. Ispat Industries and Essar Steel led the rally with others joining in.

Many sugar stocks corrected as buying support is not emerging at higher levels.

Oil prices were trending lower in early European trades as OPEC is expected to boost output by up to half a million barrels per day. Saudi Arabia, the largest OPEC member, is believed to be looking at a price band of $40 to $50 for oil in future. US markets would take the lead from these statements from the OPEC meeting.

The weak closing has turned the sentiment slightly more negative and market may find it difficult to bounce back strongly, even though a minor recovery is very much possible.

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