The day belonged to bank stocks, mostly of smaller banks, as the government decision to modify the regulations governing voting rights in banks set them on fire.

Global cues were also very strong after the strong rally in US markets yesterday. Markets seem to have started taking the volatility in oil prices more lightly as the marginal impact of higher prices is not perceived as too worrying.

The indices opened with a large positive gap from yesterdays closing and maintained the gradual build up till late in the afternoon. Some amount of profit booking in the last half hour saw the indices coming down from the highs of the day. Volumes continue to be on the lower side.

The Sensex closed at 6360, up 70 points and the Nifty at 1963, up 20 points. Nifty May futures discount to the spot index widened to 14 points from yesterday's 10 points.

Among Nifty stocks, L&T, Ranbaxy and Dr Reddy's were the major percentage gainers while Oriental Bank of Commerce, Gujarat Ambuja and HDFC were the major losers.

US markets were reassured yesterday by the statements from Fed Reserve confirming its stand on gradual increases in interest rates. The news about billionaire-investor Kirk Kerkorian increasing his stake in General Motors cheered the markets. GM had come under severe selling pressure as the company is facing serious difficulties in maintaining market share. Both Dow and NASDAQ gained well over a per cent each.

NYMEX crude futures for June delivery dropped below the $49 mark in early trades after recovering and closing above $50 to a barrel.

Indian ADR's had a fantastic run yesterday after almost 2 weeks of subdued movements. Dr Reddy's and Satyam gained 4 per cent each while Infosys, ICICI Bank and Tata Motors closed with gains of over 2 per cent each. Wipro, HDFC Bank, MTNL and VSNL all closed with gains.

Yesterday, the union cabinet approved changes to the banking regulations to remove the 10 per cent cap on voting rights. Once approved by the parliament, voting rights will be linked to the percentage of shareholding. This has been a long standing demand of foreign banks planning to takeover domestic banks. However, such takeovers will be subject to approval by the RBI which has ruled out such transactions involving strong domestic banks till 2009.

ONGC has reportedly made three new oil finds in the country, two on the eastern coast and another on the western coast. The find on the western coast is said to be more significant as it opens up new exploration possibilities near the Mumbai High fields. Estimates about potential reserves are not known. ONGC is the 100-per cent operator for all the three fields. The stock gained over two per cent.

HDFC declared its fourth quarter and annual results for the period ended March 2005. For the full year the company has reported close to 19 per cent growth in profits as revenues rose around 15 per cent. However, a subdued performance in the fourth quarter pulled the stock down after the announcement.

Software stocks had a good day after the strong rally on NASDAQ yesterday. Infosys led from the front and was trading with gains of close to 3 per cent till late afternoon. TCS and Wipro also gained over a per cent each.

Jet Airways was among the few losers closing down by almost 3 per cent. A potentially strong competitor, Kingfisher Airlines, received permission to start commercial operations yesterday. Airlines have not hiked the fares even after the recent hike in jet fuel prices by 8 per cent. Industry officials are admitting the pressures on margins even as volumes continue to grow.

Mid-cap action

Mid-cap bank stocks sizzled as investors chased the stocks on expectations of takeovers by foreign banks. All medium and small sized banks which are potential targets for takeovers made substantial gains.

Karnataka Bank was the biggest percentage gainer with gains of 20 per cent followed by Lakshmivilas, Dhanalakshmi and South Indian Bank with gains between 15 to 18 per cent. Federal Bank, Bank of Punjab and Karur Vysya posted gains of between 10 to 14 per cent. Bank of Rajasthan, ING Vysya, Centurion and Indusind also gained around 10 per cent each.

Lupin has announced a deal with a US pharma company for an anti-infective product. As per the agreement, Lupin will develop and test the product which will be marketed in the US by the American company. Lupin will retain the manufacturing rights and will receive royalty on sales in the US. The Indian company stands to gain up to $10.5 million, part of which is subject to achieving certain milestones. The stock gained over 8 per cent in early trades.

The management of Flextronics Software is supporting the move by its parent company to acquire full ownership. Reports suggested that the offer from Flextronics of Singapore will open after the company's AGM. The company reported good results for the quarter as well as year ended March 2005.

Commercial Vehicles manufacturer Eicher Motors gained after the company reported good volume growth in sales for the month of April. The percentage growth as compared to the same month of pervious year stands at an impressive 25 per cent.

Auto ancillary Rico Auto gained after the company announced plans to raise funds through a preferential allotment of issue of warrants to institutions or promoters.

Among mid-cap stocks ETC Networks, Omax Auto and Mukand Engineering were the significant percentage gainers.

Rain Calcining, Dhampur Sugar and Gujarat Flurochemicals were among the major mid-cap losers.

*Disclaimer: The author does not have any position in the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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