Markets close marginally lower after volatile session

30 September 2005

The markets turned highly volatile today as nationwide raids by the CBI on government officials led to market rumours about more searches on market participants as well. The SEBI action against some Kolkata-based brokers for indulging in illegal trading practices yesterday gave some credence to these rumours. The frontline indices were ripe for a technical correction after the sharp rise earlier in the week and traders were keen to reduce positions ahead of the weekend.

The markets opened the day with gains as some of the frontline stocks held on to their gains from the last few days. Technology stocks firmed up in opening trades and helped the indices.

Selling pressure emerged by early afternoon and the Sensex lost over 100 points within an hour. The fall was led by heavyweights ONGC and Reliance Industries, both of which lost more than 2 per cent each in intra-day trades. Though ONGC managed a partial recovery in late afternoon trades, Reliance closed the day with losses of close to 2 per cent.

Hindustan Lever was another significant loser among heavyweights, closing the day with losses of over 2 per cent. ITC continued its downtrend of last two days and declined by close to a per cent.

Some of the technology stocks turned weak in afternoon trades, Wipro closing with losses of well over a per cent and Infosys declining close to half a per cent. However, Satyam rallied in late trades and closed more than a per cent higher while TCS managed to add more than half a per cent.

The recovery started in late afternoon trades and the indices recovered most of the lost ground on good buying in select heavyweights.

Strong buying was seen in power utility stocks Reliance Energy and Tata Power, in late trades. Reliance Energy closed almost 4 per cent higher while Tata Power added well over 2 per cent.

ICICI Bank also saw good buying in the closing hours as the stock rallied to a new lifetime high and closed with gains of over 2 per cent. SBI added more than half a per cent. HDFC Bank remained weak and lost more than a per cent while HDFC added close to 2 per cent. Punjab National Bank also gained close to 2 per cent.

Stocks of oil marketing companies turned weak in early trades before recovering part of the losses. HPCL lost more than 2 per cent while BPCL declined well over a per cent. Indian Oil closed more than half a per cent lower.

The Sensex closed at 8634, a loss of 16 points, and the Nifty at 2601, down by 10 points. Nifty October futures closed at a discount of 5 points to the spot index.

Reliance Energy, IPCL and Tata Power were the biggest gainers among Nifty stocks while Zee Tele, HLL and HPCL were the major losers.

The US markets recovered from the subdued trend of the last few weeks, ahead of the third quarter earnings season, despite the firm trend in oil prices. Good earnings forecasts from some of the frontline companies also helped the indices. The Dow and S&P 500 closed with gains of close to a per cent each. Gains on the NASDAQ were higher at more than a per cent, as technology stocks bounced back strongly.

Indian ADRs had a mixed day once again on the US exchanges yesterday, despite the market recovery. Dr Reddy's, which has been rising on Indian exchanges for the last few days, was the biggest gainer. The stock closed almost 4 per cent higher. ICICI Bank recovered from the previous day's losses and closed almost 2 per cent higher. VSNL added half a per cent. MTNL was the biggest loser, closing more than 2 per cent down, followed by Tata Motors, which lost well over a per cent. HDFC Bank closed almost unchanged.

Technology ADRs faced some selling pressure after two days of gains, even though Satyam managed to maintain the uptrend. Wipro lost almost a per cent while Infosys closed with marginal losses.

Crude oil prices maintained their uptrend yesterday as well, adding more than two-thirds of a per cent. The disruptions caused by the two hurricanes have raised fears of tight winter supplies of heating oil. Crude oil futures for November delivery closed at $66.79 to a barrel, 44 cents higher from the previous day's close, on the NYMEX yesterday. The commodity is trading with marginal losses in early European trades today.

Cement major ACC has formally signed the agreement to transfer its refractory division to ICICI Venture. ACC had announced this deal earlier this year and the company will raise Rs257 crore from the sale. ICICI Venture has floated a new company called Ace Refractories, which will take over and run the business. The stock added more than a per cent.

The management of Mahindra & Mahindra has confirmed that it is keen to acquire Romanian tractor manufacturer Tractorul, for which the company has submitted a bid to the Romanian government. The company said it is also planning to enter the Turkish and Egyptian tractor markets. The stock closed one-and-a-half per cent higher.

Reliance Capital informed the exchanges that its acquisition of insurance company AMP Sanmar has received the approval of the Insurance Regulatory Authority. Reliance Capital had announced earlier that it would be acquiring a 100 per cent stake in AMP Sanmar for an undisclosed amount. The stock lost more than 5 per cent in today's trade.

Media reports quoting Hinduja group officials have indicated that Ashok Leyland is planning to set up a truck assembly and bus building unit in Dubai. Further details are not available.

Satyam Computers said its BPO subsidiary, Nipuna, would meet this year's revenue guidance of $18 million. The subsidiary had reported revenues of $10 million during last year.

Bajaj Auto expects total monthly unit sales to cross the 200,000 mark during September. This would be the best ever monthly sales performance by the company. The stock has been on an upswing for the last few days and remained firm throughout today's volatility. The stock closed with gains of close to 2 per cent.

Mid-cap action

Mid-caps continued their weakness in today's trade as well. Heavy selling was seen in early afternoon trades as the market breadth turning extremely negative. The mid-cap index lost more than a per cent by early afternoon, before recovering in late trades. Small caps on the BSE declined further as a large number of stocks remained in the lower circuit. The CNX mid-cap index lost 6 points and closed the day at 3807. The BSE small-cap index lost close to 2 per cent for the second day.

The board of directors of McDowell Limited has passed an enabling resolution to raise up to $250 million from an overseas issue of GDR/FCCB at an appropriate time. The management said details would be worked out after discussions with merchant bankers. The funds would help the company to reduce its debt burden.

Bharti Shipyard informed the exchanges that the company has won a new order from a Netherlands-based shipping company for building six multi-purpose vessels. The order is reportedly worth $66 million.

The management of SPIC has confirmed that ONGC would soon start due diligence for acquiring a stake in the company's subsidiary, SPIC Petrochemicals. With the participation of ONGC, the company is planning to revive the petrochemicals project, which is expected to cost Rs1,300 crore. SPIC is also planning to sell a part of its stake in another subsidiary, Indo-Jordan Chemicals.