Markets give up early gains, close lower for the fourth day

Rex Mathew
10 October 2005

New Delhi: After three consecutive days of losses, the markets opened on a positive note and the frontline indices gained well over half-a-per cent each in early trades. Many of the beaten down heavyweights bounced back in morning trades and held the indices.

Selling pressure emerged soon after and the indices slipped into the red within an hour. Auto stocks and select metal stocks turned weak pulling down the indices.

Strong buying in technology stocks ahead of the results announcement led to a slow and steady recovery which lasted till late in the afternoon. By then, the indices were retesting the highs of early trades. Another bout of selling in closing trades pulled the indices back into negative and they closed with marginal losses.

Technology stocks were the best performers in today's markets. Infosys and TCS would be the first ones to come out with quarterly numbers tomorrow. Infosys led the rally and closed with gains of over 2 per cent. Satyam and Wipro also gained close to 2 per cent each. TCS was subdued as many analysts are predicting a weak second quarter for the company.

Bharti Tele was the other major gainer among index stocks. The company had reported strong monthly subscriber additions last week and second quarter results are also expected to be good. The stock added over 2 per cent.

Banking stocks continued their weak trend. SBI lost close to one-and-a-half per cent while PNB lost well over a per cent. HDFC also declined by a per cent. ICICI Bank gave up early gains and closed marginally higher. HDFC Bank was the lone winner in this space, adding over a per cent.

Both ONGC and Reliance Industries closed the day with losses, with the former losing well over a per cent.

Jet Airways, which had seen a strong rally on Friday, declined and closed almost 3 per cent lower.

Maruti was the biggest loser among auto stocks, closing more than 2 per cent lower. Tata Motors also closed lower.

Sensex closed at 8484, a loss of 8 points, and the Nifty at 2567, lower by 7 points. Nifty October futures closed at a discount of 7 points to the spot index.

Dr Reddy, Bharti and Infosys were the biggest gainers among Nifty stocks while IPCL, Ranbaxy and Hindalco were the major losers.

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.

According to newspaper reports, ONGC is planning to spend close to Rs4,000 crore to replace its old offshore assets. The company is planning to acquire new offshore service vessels, rigs and tugs over the next few years to replace ageing assets.

Meanwhile, ONGC Videsh has been awarded an exploration block in Libya. The company would pay $6 million as signing amount to the Libyan government. The Indian Oil - Oil India combine has also won a block.

RBI has reportedly rejected the application submitted by HDFC Bank to float an NBFC subsidiary. The bank was planning to offer more equity market related services to customers through the new subsidiary. An NBFC subsidiary would also have allowed HDFC Bank to increase its own exposure to equity investments from the currently allowed 8 per cent of assets. A similar application made by IndusInd Bank has also been rejected.

Tata Motors is reportedly planning to double the assembling capacity of its recently launched LCV model, Ace. The vehicle, presently available only in the southern states, has been very successful and the company has raised the annual sales target to 60,000 units. The vehicle would be available nationwide in the near future.

M&M is targeting exports of 6,000 units of SUV's in the current year, a 100 per cent growth from the previous year. The company has identified Russia, Malaysia and Western Europe as the major markets for its SUV models. The company would also consider assembly operations in Russia and Malaysia once volumes build up.

SBI has acquired a 76-per cent stake in Kenya-based Giro Commercial Bank. The Kenyan bank is a small bank with 6 branches in three major Kenyan cities. The acquisition has cost SBI over $7 million.

Indian Oil and GAIL have set up a new joint venture, Green Gas, to supply piped natural gas to domestic and commercial customers.

Ranbaxy has received the final US FDA approval for the generic version of Pfizer's epilepsy drug. The company's patent challenge for blockbuster drug Lipitor would be decided by a British court this week. The British ruling would be crucial for Ranbaxy to challenge the patent in the US. The stock was very weak in today's trades and closed the day with losses of well over 4 per cent.

Dr Reddy's has received the final US FDA approval for the generic version of a diabetic drug of Aventis. The company also received the preliminary approval for a cholesterol drug. The stock continued it's up trend today as well and closed well over 2 per cent higher.

Mid-Cap Action
Mid-caps also saw some volatility during the day. After bouncing back in early trades, the mid-cap index declined as selling emerged in many momentum stocks and other gave up their early gains. The losses in mid-caps were much higher than the frontline stocks and the market breadth was also negative. The CNX Mid-Cap index lost 19 points and closed the day at 3787.

Mid-cap software company Aztec Software reported excellent results for the quarter ended September. Revenues and profits for the quarter increased more than 130 per cent each compared to the same quarter of previous year. The company also managed a healthy growth of around 20 per cent in both revenues and profits when compared to the first quarter figures.

According to news agency reports, Aztec would consider more acquisitions to sustain growth momentum. The management is confident of good growth in the next 2 quarters as well. The stock gained as much as 11 per cent in intra-day trades before closing 7 per cent higher.

Stock broking company IndiaBulls Financial reported a close to 50 per cent growth in profits for the quarter ended September as compared to the June quarter. Growth in revenues was more than 50 per cent. The stock opened very strongly following the results announcement but gave up most of its gains later in the day and closed 2 per cent higher.

Yes Bank has reported excellent growth in net interest income for the quarter ended September. Profits for the quarter were at over Rs14 crore as against a loss during the same quarter of previous year. Total income grew more than 11 times to Rs42 crore as compared to the previous year.