The relief rally gathers momentum as indices gains further

08 November 2005

The recovery continued for the fourth straight session, excluding the muhurat trading, as the frontline indices have now recovered more than half of their losses in the October correction. Despite a mixed trend in Asian markets and record lows for the rupee, the Sensex closed the day well above 8300.

The markets started the day with gains but declined sharply immediately. The indices received support above yesterday's closing levels and they started an uptrend which continued for the rest of the session.

Unlike yesterday, the uptrend was not very smooth and the indices dipped sharply twice on profit booking. The strength of the rally was visible as the indices survived the selling pressure and continued their upward journey. The last half hour saw a very sharp fall with the indices losing almost half of their gains, only to bounce back towards the closing minutes.

The Nifty crossed 2500 mark in later afternoon trades, though it did not manage to close above the level.

Oil stocks were the stars of the day led by heavyweight ONGC. The stock gained ground steadily throughout the session and closed with gains of almost 2 per cent. Reliance Industries added a third of a per cent.

Oil marketing companies saw very good gains on reports that the government has almost finalised the issue of oil bonds. HPCL added well over 4 per cent while Indian Oil closed more than 3 per cent higher. BPCL gained close to 2 per cent.

Wipro was the biggest gainer among technology stocks, adding over 3 per cent today. Satyam closed a per cent higher while TCS added close to a per cent. Infosys gave up part of the early gains in late trades but managed to close with gains. HCL Technologies close with gains of close to 5 per cent.

Ranbaxy surged 3 per cent, continuing its recovery from the recent fall. Dr Reddy's gave up all its gains in late trades and closed marginally lower.

Hero Honda was the star among auto stocks, adding more than 5 per cent. Bajaj Auto saw a surge in afternoon trades and closed 3 per cent higher. Maruti added 3 per cent while Tata Motors closed over a per cent higher.

Private bank stocks ICICI Bank and HDFC Bank had a good day with the former adding a per cent and the latter closing 2 per cent higher. SBI was subdued and closed marginally lower. HDFC added well over 3 per cent.

Among the core sector stocks, NTPC was the biggest gainer adding 4 per cent. ABB added 3 per cent while BHEL added well over a per cent. L&T closed almost 2 per cent higher.

ACC, HLL, IPCL and Gujarat Ambuja Cements were among the other gainers among frontline stocks.

Sensex closed at 8318, a gain of 111 points, and the Nifty at 2493, higher by 31 points. Nifty November futures closed at a discount of 8 points to the spot index.

Hero Honda, HCL Technologies and HPCL were the major gainers among Nifty stocks while Zee Tele, SAIL and MTNL were the major losers.

US markets closed higher yesterday, helped by falling oil prices. The Dow added half a per cent while the S&P 500 gained one fifth of a per cent. NASDAQ closed with gains of over a third of a per cent.

Infosys and Dr Reddy were the best performers among Indian ADR's yesterday. Dr Reddy added well over 2 per cent. Telecom ADR's MTNL and VSNL were the biggest losers, closing lower by 2 per cent each.

Warmer than expected weather across the US prompted predictions of lower winter demand for oil and pulled down oil prices yesterday. November futures on the NYMEX slipped below the $60 per barrel mark once again and closed at $59.47. Crude slipped another half a per cent in early European trades today.

ONGC has been awarded an offshore oil exploration block in Vietnam, the company's second in that country. The block is believed to hold good potential and ONGC would hold full participatory interest.

TCS has announced that it would acquire a financial services BPO company based in Chile for $23 million. The privately held Chilean company reportedly had revenues of over $35 million and was profitable. TCS has a joint venture with this company in Chile which would also become a fully owned subsidiary of TCS. After the completion of this deal, TCS would have employee strength of over 2,000 in the region.

TCS said it would also hire 1,000 employees in the Latin American region to service the ABN Amro contract received recently. The software major is targeting annual revenues of $100 million from the Latin American region by next year.

Dr Reddy's today announced that it would acquire the bulk drugs business of Swiss drug major Roche in Mexico. The business being acquired at a cost of $59 million currently has a portfolio of 18 products including API's and intermediates. Dr Reddy said the acquisition would help to strengthen its position in the custom pharmaceutical services segment which supplies basic ingredients and intermediates to research oriented companies.

ICICI Bank would raise $300 million from an overseas issue of unsecured notes to fund its overseas operations. The notes would have a maturity of 5 years and would carry a fixed interest rate.

Mid-Cap Action

Mid-caps also continued their momentum from the last few days and surged ahead. The momentum stocks saw a lot of action with much higher volumes. The CNX Mid-Cap index gained 46 points and closed the day at 3648.

According to newspaper reports a consortium of Kribhco and the Shyam Telecom group has entered into an agreement to acquire the urea plant of Oswal Chemicals. The plant has a capacity of 8.5-lakh tonnes per annum and is profitable. The acquisition would reportedly cost Rs1,900 crore and Kribhco would hold a 60-per cent stake and the Shyam group the balance. Good buying was seen in Oswal Chemicals and Shyam Telecom today.

Monthly sales of retailing major Pantaloon rose almost 150 per cent for the month of October to touch Rs200 crore. This is the best ever monthly performance of the company, helped by strong consumer demand during the festive season. The stock closed 5 per cent higher.

The board of directors of Mphasis BFL has approved a share buyback scheme. The buyback would be limited to 10 per cent of the capital and the price would be announced later.