Indices close with gains after considerable volatility

25 October 2005

Finally, the indices took heart from a set of positive developments and better global markets to manage a recovery. The US markets had a very firm closing yesterday and most Asian markets followed the trend and remained firm today. The interest rate hikes announced by the RBI were in line with market expectations which helped the markets further.

The RBI hiked both the repo and reverse repo rates by 25 basis points while leaving the bank rate and CRR at their previous levels. The central bank has also hiked its GDP forecast for the current year by 50 basis points.

The indices opened firm but gave up all the gains within half-an-hour. Expectations about the credit policy helped to start a recovery and took the Sensex past the 8000 mark by noon. The indices surged ahead after the policy was announced and were trading with gains of over one-and-a-half per cent each by early afternoon.

Selling pressure emerged soon after and the indices slid rapidly. Within 15 minutes the Sensex was back below the 8000 mark, and slipped rapidly towards 7950 levels. The last half hour saw some buying at lower levels which helped the indices to recover some ground.

The day belonged to banking stocks as they attracted buying interest in the absence of any negative surprises from the RBI. Most banks are happy with the policy and do not expect an across the board rise in interest rates.

PSU bank stocks led by PNB were the best performers today. PNB added well over 3 per cent while OBC added close to 4 per cent. SBI gained over 2 per cent. Among the private sector banks, ICICI added over a per cent while HDFC Bank closed lower.

Technology stocks were firm led by HCL Technologies which announced its results today. The stock added close to 5 per cent. TCS was the second best performer gaining over 2 per cent.

Dr Reddy made a smart bounce back, gaining more than 4 per cent. Ranbaxy continued its downtrend and lost another 3 per cent.
Among the steel stocks, SAIL recovered and added over 3 per cent. Tata Steel closed lower. Second rung steel stocks led by Essar Steel saw considerable buying interest.

Zee Tele added more than 2 per cent despite negative news on the cricket telecast rights. Dabur and L&T were among the other major gainers.

Sensex closed at 7992, a gain 71 points, and the Nifty at 2418, higher by 23 points. Nifty October futures closed at a discount of 2 points to the spot index.

HCL Tech, Dr Reddy and OBC were the few gainers among Nifty stocks while Ranbaxy, Maruti and Hero Honda were the major losers.

US markets staged a smart recovery yesterday after the US government nominated Ben Bernanke to succeed US Fed chairman Alan Greenspan after his retirement early next year. Some analysts expect the new chairman to be more flexible on interest rates and the markets were relieved as the uncertainty surrounding the new appointment has been removed.

The Dow and S&P 500 indices added one-and-two-thirds of a per cent each while the gains on the NASDAQ were marginally lower. Banking and energy stocks were the biggest gainers in yesterday's rally.

Crude oil futures for December delivery closed the day $60.32 per barrel, down 31 cents, after recovering from early lows yesterday. Crude oil futures are trading lower at around $60 per barrel in early European trades today.

Tata Motors reported a net profit of Rs338 crore for the quarter ended September as against Rs309 crore during the previous year quarter. Total revenues were higher at Rs4,839 crore as compared to 4,216 crore during the same quarter of previous year. The results are not strictly comparable as the current year figures include the results of three companies including Tata Finance, which were merged into the Tata Motors.

The company exceeded market expectations on revenues but profits fell short of forecasts. Other income during the quarter was lower which affected the bottom line. Volume sales during the second quarter rose 12 per cent to over 107,000 units. The company said all the new products introduced during the quarter are doing better than expectations. Tata Motors also said it expects cost pressures to remain in the near future while interest rates may rise.

Housing finance major HDFC has reported a net profit of Rs299 crore for the September quarter, a growth of over 20 per cent as compared to the previous year figure of Rs248 crore. Total revenues for the quarter rose almost 25 per cent at Rs1,048 crore as against Rs844 crore during the same quarter of previous year.

IPCL is riding on the upswing in petrochemical prices and has posted a 120 per cent rise in net profits to Rs303 crore as against Rs138 crore for the same quarter of previous year. Total revenues for the quarter were higher at Rs2,079 crore as compared to Rs1,852 crore.

VSNL has reported a net profit of Rs91 crore for the September quarter as against Rs88 crore during the previous year quarter. Total revenues were higher by 19 per cent at Rs961 crore.

Mahindra & Mahindra has emerged as the sole bidder for Romanian tractor company Tractorul SA. The Romanian company is now under government ownership and M&M has bid for an 80 per cent stake. Tractorul has a capacity of 15,000 tractors and 18,000 engines per annum. The company had a turnover of around Rs250 crore during the previous year and much of its capacity is unutilised. The deal size in not known yet.

Reliance Capital would acquire a 14.8 per cent stake in Kinetic Engineering. The ADAE group company has picked up the stake at Rs178 per share, marginally lower than the current market price of Kinetic. Reliance Capital would also subscribe to 6 lakh warrants of Kinetic which can be converted into equity shares at Rs178 per share within the next 18 months. Kinetic would also issue preference shares worth Rs15 crore to Reliance Capital.

Zee Telefilms has been disqualified by BCCI in the bidding process for cricket telecasting rights. The company had emerged as the highest bidder earlier after which the matter was dragged into the courts. Zee has been disqualified on the ground that it does not have past experience in telecasting live matches.

Engineering major ABB has reported a net of Rs53 crore for the September quarter as against Rs36 crore for the previous year quarter. Total revenues for the quarter were higher at Rs720 crore as compared to Rs575 crore.

Mid-Cap Action

Mid-caps did not show any of the resurgence displayed by the frontline stocks. The index remained subdued for most of the day and gains were much lower than large cap indices. The CNX Mid-Cap index added 13 points and closed the day at 3547.

Aurionpro Solutions made its debut on the markets today and closed with gains of 17 per cent. Issued at Rs90 per share, the stock opened at Rs102 on the NSE and went on to touch a high of Rs134 before closing at 106.

Second quarter profits of Century Textiles almost halved to Rs7.4 crore as against Rs14.2 crore for the same quarter of previous year. Total revenues were marginally higher at Rs595 crore. The stock added 4 per cent despite the poor results.

Sterlite Opticals has reported a considerably lower profit for the quarter ended September despite an increase in total revenues. Profits for the quarter were at Rs1.2 crore as against Rs5 crore during the previous year quarter. Revenues were higher at Rs124 crore as against Rs86 crore.