Indices lose further ground in volatile trade

07 October 2005

The markets turned volatile today as global markets did not show any sure signs of a recovery and reports of large FII selling in the derivatives segment yesterday. The US markets continued their weak trend yesterday as well and some of the Asian markets also opened weak today.

The indices opened on a weak note but gained strength soon after and went on to post the day's highs within an hour. Most frontline stocks which declined substantially in yesterday's trade recovered partially.

Reports of heavy selling by FII's in the derivatives segment yesterday hit the markets within an hour of opening and traders promptly resorted to selling. By noon, statements from banks indicating a possible rise in interest rates by the end of this financial year started emerging and put heavy pressure on the bank stocks.

The indices touched the lows of the day in early afternoon trades with the Sensex declining close to 100 points. Short covering emerged soon after and the markets started a steady recovery. The indices recovered and moved marginally into the positive by late afternoon. Another bout of selling in the last half-hour pulled down the indices again and they closed the day on a weak note.

Auto stocks were weak in today's trade. M&M lost over 2 per cent while Tata Motors lost over one-and-a-half per cent. Hero Honda also lost well over one and a half per cent.

Among the banking stocks, ICICI Bank lost close to a per cent while SBI lost over a per cent. HDFC Bank and HDFC also closed lower.

Jet Airways was the best performer among index stocks, closing almost 6 per cent higher on announcement of a fare hike.

HLL held firm for most of the session and closed almost 3 per cent higher. Dabur was another winner from the FMCG pack, adding over 2 per cent.

Tata Power gained well over 2 per cent. Zee Tele was another winner closing the day with gains of a per cent.

Pharma stocks also were firm led by Dr Reddy, which maintained it's up trend of the last few days and closed with gains of close to 2 per cent. Ranbaxy closed almost a per cent higher. However, Cipla lost close to 3 per cent.

Sensex closed at 8491, a loss of 37 points, and the Nifty at 2574, lower by 5 points. Nifty October futures closed at a discount of 4 points to the spot index.

Jet Airways, HLL and Tata Power were the biggest gainers among Nifty stocks while VSNL, Cipla and M&M were the major losers.

After an attempt at recovery in early trades, US indices continued their downtrend yesterday as well. US Fed officials continued to caution about inflationary pressures, which kept the markets nervous over the past few days. Another big fall in crude prices weakened oil stocks further, adding more pressure on the indices.

The Dow and the S&P 500 lost around a third of a per cent each. Technology stocks were the worst affected and the NASDAQ lost close to a per cent.

Indian ADR's tumbled yesterday as well in line with the overall market sentiment. Once again, the banking stocks were the worst affected. ICICI Bank declined another 5 per cent after the previous day's loss of over 8 per cent. HDFC Bank also lost over 3 per cent. Dr Reddy lost 4 per cent while VSNL and Tata Motors closed over 3 per cent lower. MTNL lost close to 2 per cent.

Technology ADR's were once again better off when compared to other stocks. Wipro and Satyam lost over a per cent each while Infosys dropped half a per cent.

Crude oil futures tumbled another 2 per cent yesterday to its lowest level in two months. Crude futures for November delivery closed the day at $61.36 per barrel, down $1.43, on the NYMEX. The commodity has recovered in early European trades today.

The finance ministry has reportedly opposed the move to allow the Indian Oil-Oil India combine to acquire oil assets abroad. The proposal was put forward by the oil ministry for clearance by the cabinet. Indian Oil had announced its plans earlier to aggressively bid for overseas assets. The finance ministry is reportedly in favour of giving pre-eminence to ONGC Videsh in overseas forays.

ICICI Bank expects to double its private banking business over the next six months. The bank is the largest private banking player in the country and claims to have close to Rs25,000 crore of clients' wealth under its management.

ICICI Bank expects interest rates to rise 50 basis points by March 2006. The bank also expects overall credit demand to grow at over 25 per cent during the next financial year.

Housing finance major HDFC is planning to list two of its privately held subsidiaries over the next few years. The BPO company, Intelenet, a joint venture with UK-based Barclays Bank, would be the first one to come out with an issue within the next three years. The insurance subsidiary, HDFC Standard Life, would be listed by the year 2010.

Jet Airways has confirmed that it would raise air fares by 10 per cent from next week. The price increase is to set off higher fuels costs. Other airlines are also planning a price hike or a surcharge.

GAIL would enter the LPG marketing business from the next financial year. The company has reportedly appointed a consultant to advice on the new business. GAIL would also set up a new product pipeline at a cost of Rs2,500 crore for distribution in Punjab and Haryana.

Ranbaxy has won US FDA approval for manufacturing and marketing an anti-diabetic drug in tablet form. The tablet is a generic version of a proprietary drug being marketed by Aventis.

Ashok Leyland has reported 27-per cent growth in sales volumes for the month of September as compared to the same month of last year. For the period April-Sep, volumes have increased close to 20 per cent.

Bharti Televentures added more than 650,000 new mobile subscribers during the month of September, its best ever monthly performance. The company's mobile subscriber base has crossed 14 million. The stock added over a per cent.

Mid-Cap Action

Mid-caps also saw considerable volatility through the day. After opening weak, the mid-cap index recovered and raced away to add more than a per cent. The index declined in early afternoon trades and could not recover as much as the frontline indices. The CNX Mid-Cap index lost 23 points and closed the day at 3806, a loss of over half a per cent.

Ruchi Soya has announced that it is planning to merge six different companies belonging to the Ruchi group with itself. The merger is subject to necessary approvals. The company said total revenues of the merged entity would be in excess of Rs7,000 crore. The Ruchi group is one of the largest players in the edible oil business and has a host of retail brands.

KEC International has won an order from the government of Afghanistan for construction of power transmission lines. The ADB funded project is worth close to Rs160 crore.

Radico Khaitan, the second largest liquor company in the country, has informed the exchanges that it would set up a new distillery. The facility would have a capacity of 27 million litres per annum.