New Delhi: Most traders were expecting Tuesday's recovery to continue today as well, especially since both TCS and Infosys had reported excellent quarterly numbers. However, continuing weakness in the US markets and losses across most Asian markets in today's trade led to a sell off.

After opening weak and declining almost a per cent on the frontline indices, the markets made a smart comeback before noon and briefly went into the positive. The up trend was not sustained and the indices drifted into the red once again.

The selling gathered momentum by afternoon and the indices slipped substantially. The last hour saw the frontline indices losing more than a per cent each to close the day with losses of more than 2 per cent each.

Pharma stocks were among the biggest percentage losers today. Ranbaxy declined 7 per cent after the adverse verdict from a UK court. Dr Reddy lost over 4 per cent after maintaining a steady uptrend for most of last week.

Sun Pharma and Cipla managed to close marginally in the positive.
Metal stocks faced a major sell off on reports that commodity prices would decline substantially by next year. The steel companies Tata Steel and SAIL were the worst hit. Tata Steel lost over 4 per cent while SAIL closed more than 6 per cent lower.
Among the aluminium stocks, Hindalco lost over 3 per cent while Nalco declined well over 2 per cent.

Market heavyweights ONGC and Reliance Industries were weak for most part of the day. ONGC lost over 2 per cent while Reliance closed almost 2 per cent lower.

Technology stocks were surprisingly weak after TCS and Infosys reported better than expected results on Tuesday. Infosys and Wipro were the biggest losers, closing more than 2 per cent lower each. TCS declined after a positive opening and closed the day almost 2 per cent lower. Satyam lost close to 3 per cent. HCL Technologies lost more than 3 per cent.

Auto stocks had a weak day as all of them gave up substantial ground in afternoon trades. Tata Motors lost over 3 per cent while Maruti closed 3 per cent lower. Among the two-wheeler stocks, Hero Honda was the biggest loser closing the day almost 5 per cent lower.

Sensex closed at 8377, a loss of 163 points, and the Nifty at 2537, lower by 53 points. Nifty October futures closed at a discount of 6 points to the spot index.

Tata Tea, Sun Pharma and ITC were the biggest gainers among Nifty stocks while Ranbaxy, SAIL and Tata Steel were the major losers.

US indices continued to remain weak on concerns about interest rate hikes. Traders continued to be undecided about corporate performance as the results declared so far have been mixed. Apple Inc declared disappointing revenue growth from its music player business and lost more than 5 per cent. Technology stocks were the worst affected in yesterday's trade.

The Dow lost a third of a per cent while S&P 500 closed close to two-thirds of a per cent. NASDAQ closed more than a per cent lower.

Crude oil futures recovered from recent losses on concerns that the decline in demand may not last long. Crude futures for November delivery closed the day at $64.12 per barrel, almost a per cent higher, on the NYMEX. The commodity is trading flat in early European trades today.

TCS reported a 20-per cent rise in second quarter profits to Rs694 crore as compared to Rs576 crore during the same period for the previous year. Revenues were higher by more than 23 per cent at Rs2,982 crore as compared to Rs2,448 crore.

The company's profits and revenues have increased by more than 10 per cent each as compared to the first quarter. The company added 74 new clients during the quarter and took more than 4,400 employees on a net basis. The company said it expects the next two quarters to be equally good. TCS does not give any guidance on revenues or profits as a policy.

An English court has ruled against Ranbaxy on its challenge on the main patent of Pfizer's blockbuster drug, Lipitor. The court has however ruled that a second patent is invalid. Both Ranbaxy and Pfizer said they would appeal against the verdict. If upheld by the higher courts, Pfizer would have exclusivity on the drug till 2011.

The verdict may have a very significant influence on the legal battle being fought between these two companies in the US courts for the same drug. Lipitor had global sales of $12 billion last year, with the US contributing a significant part. Ranbaxy said that the verdict is a partial success, since the second patent has been ruled as invalid.

Tata Tea announced that the US subsidiary of Tetley, a Tata Tea subsidiary, would acquire speciality tea company Good Earth and its marketing arm. Good Earth is a well known brand in speciality and herbal teas in the US. The US market for such products are growing at a fast pace. The acquisitions would give the Tata-Tetley group considerable strategic strength in the US market.

Bank of Baroda may come out with a public issue to shore up its capital base. Reports suggest that the bank may raise up to Rs1,600 crore from the issue.

Newspaper reports suggest that VSNL is planning to take more submarine cable laying vessels on lease to speed. The company may also acquire such a vessel in future. VSNL is also said to be in discussions to set up a cable maintenance centre at Kochi.

According to media reports, global oil major BP may take a 26-per cent stake in HPCL's export-oriented refinery project. BP may also enter fuel retailing in the country.

Mid-Cap Action

Mid-caps were relatively better off in today's trade, holding on to early gains till afternoon. The mid-cap index finally gave up in late afternoon trades and closed the day with losses of close to a per cent. The CNX Mid-Cap index lost 35 points and closed the day at 3751.

Media group Television Eighteen has announced a reorganisation of the holding structure. A new holding company, TV18 Network, would be created and this new company would hold a 51-per cent stake in the listed company Television Eighteen India. TV18 Network would also hold a majority stake in the soon to be launched general news channel India Broadcasting Network.

Television Eighteen India would have the TV channels CNBC TV18 and Awaaz as well as the website moneycontrol.com under it. Existing shareholders of Television Eighteen India would be allotted shares in TV18 Network on a proportionate basis. The new company would be listed on the exchanges after completing the necessary formalities.

Sterling Biotech has entered into an agreement to acquire the manufacturing facilities of Torrent Gujarat Biotech. The deal was reportedly concluded at Rs55 crore. The deal is subject to necessary approvals. Newspaper reports suggest that Sterling Biotech is raising over Rs3,000 crore to finance its acquisition and expansion plans. The company is one of the largest manufacturers of pharma grade gelatine in the world.

Indo-Rama Synthetics reported a 30-per cent rise in second quarter profits as compared to the previous year. Revenue growth for the quarter was marginal. The company said its board has approved an overseas issue to raise up to $100 million.

Mid-cap pharma company Orchid Pharma reported an almost six-fold jump in second quarter profits as compared to the previous year. Revenues were higher by over 40 per cent. The company claimed it can further improve its margins in the coming quarters. The stock closed with losses after trading firm in the early part of the day.

Mid-cap software company Mastek has reported a 23-per cent rise in first quarter profits as compared to the previous year. Revenues were higher by over 15 per cent. The stock declined substantially in today's trade.

Shopper's Stop informed the exchanges that the company has entered into a franchising agreement with UK-based Mothercare to launch Mothercare stores in the country.

Impal, Godavari Fertilisers and Centurion Bank were among the significant mid-cap gainers on the NSE.

India Infoline, Mastek and Kinetic Motors were among the significant mid-cap losers on the NSE.

*Disclaimer: The author may have positions in some of 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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