Indices close marginally lower after volatile session

09 November 2005

Markets opened the day in positive territory and surged ahead in morning trades after some initial volatility. Continued buying by the FII's in both the cash and derivatives markets in recent sessions as well as firm Asian markets supported the momentum. Asian markets saw major gains in today's trade with Taiwan and Hong Kong being the biggest gainers.

By mid-morning trades, the indices were trading with gains of around a per cent each. The Sensex went close to 8400 and the Nifty saw a high of 2517. Selling emerged at these levels and the indices saw a sharp decline. By noon, both the Sensex and Nifty were trading with losses.

Early afternoon saw another attempt by the markets to recover from the losses but was beaten down again. The indices traded with losses of half a per cent each in late afternoon trades before a late rally helped them to recover part of the losses.

Dr Reddy was the star of today's trade among frontline stocks, closing almost 5 per cent higher. The stock attracted a lot of buying interest, reportedly from institutional investors. The company had declared better than expected quarterly results and announced an overseas acquisition.

Among the other pharma stocks, Sun Pharma added over 3 per cent. Glaxo saw a sharp jump in the closing minutes and closed 2 per cent higher. Ranbaxy lost over to 2 per cent.

FMCG was another sector which did well today, with HLL leading the way. The stock traded with gains throughout the session and closed 1.5 per cent higher after a late surge. ITC also added over 1.5 per cent.

Technology was the worst performing sector as all frontline software stocks declined after the rupee recovered partially against the US dollar. TCS and Infosys lost well over a per cent each while Wipro closed almost 2 per cent lower. Satyam lost close to a per cent and HCL Technologies closed more than a per cent lower.

Oil stocks, which had a good run yesterday, came under selling pressure. ONGC closed a per cent lower. HPCL closed more than 2 per cent lower while Indian Oil lost a per cent. BPCL managed to close with gains of a per cent.

Auto stocks had a mixed day with Tata Motors losing a per cent and Maruti closing half a per cent higher. M&M closed over a per cent higher. Among the two-wheelers, Bajaj Auto closed a per cent higher while Hero Honda shed well over a per cent.

Banking stocks also had a mixed day though SBI was one of the biggest gainers among large caps. The stock added over 1.5 per cent. ICICI Bank could not sustain early gains and closed flat. HDFC Bank closed lower while PNB gained a per cent.

Capital goods and engineering stocks had a weak day, Siemens being the biggest loser closing more than 2 per cent lower. ABB, BHEL and L&T also closed lower.

Power utility stocks Tata Power and Reliance Energy were among the losers in today's trade.

Sensex closed at 8309, a loss of 9 points, and the Nifty at 2489, lower by 4 points. Nifty November futures closed at a discount of 17 points to the spot index.

Dr. Reddy, Sun Pharma and Zee Tele were the major gainers among Nifty stocks while HPCL, Ranbaxy and Dabur were the major losers.

US markets declined yesterday on worries about a slowdown in the housing sector. The boom in the real estate sector has been one of the main drivers of the US economy over the last few years. Stocks of home construction and related companies fell after a leading home builder gave out a profit warning.

The Dow lost a quarter of a per cent while the S&P 500 declined one fifth of a per cent. Losses on the NASDAQ were lower at one tenth of a per cent.

Indian ADR's had a good day yesterday in the US markets with all of them ending with gains. Wipro, HDFC Bank, VSNL and Infosys all closed with gains of around 2 per cent each.

Crude futures added less than half a per cent as traders waited for the weekly US inventory data to be released later today. November futures on the NYMEX added 24 cents and closed at $59.71 to a barrel. Crude is trading marginally lower in early European trades today.

Gail India is reportedly in negotiations with a small Australian exploration company to bid for exploration in 2 blocks in Australia. The company's board has already approved the plans and the company may also pickup minority stakes in existing blocks on the Australian company.

Mahindra & Mahindra is reportedly targeting a production of 6,000 tractors this year at its Chinese plant. The Chinese venture which is 80 per cent owned by M&M has an annual capacity of 12,000 units. Exports of small tractors have already started from China and the company is targeting the US and Australian markets.

Ashok Leyland has reported a 27 per cent rise in October volumes as compared to the same month of previous year. Domestic sales increased by 25 per cent while exports increased 65 per cent, though on a low base. The company was helped by the lower production by Tata Motors because of supplier problems. For the first 7 months, Ashok Leyland has reported a 20 per cent rise in volumes.

Cipla has announced that the company has entered into an agreement with a US drug firm to develop and market an oral anti-infective drug. Under the deal, Cipla would develop and manufacture the drug while the US company would be responsible for regulatory approvals and marketing.

Mid-Cap Action

Mid-caps also lost their way after trading firm in early trades. Some of the popular stocks which had seen significant appreciation over the last few sessions corrected on profit booking. The CNX Mid-Cap index lost 7 points and closed the day at 3641.

IFC, the private investment arm of the World Bank group, has indicated that it is in discussions to acquire equity stakes in some of the private sector banks in the country. The organisation said it is interested in acquiring a 10- per cent stake in Kerala based Federal Bank. ICICI Bank is the single largest shareholder in Federal Bank and there were reports that ICICI is in discussions with IFC for selling part of the stake.

Some of the major shareholders in private sector banks have to reduce their holdings as per the RBI cap on equity holdings in domestic banks. IFC said it is also keen in acquiring a stake in HDFC Bank and UTI Bank as well. There are also reports that the organisation is planning to invest $500 million in Indian companies over the next six months.

Some of the smaller banking stocks were the best performers among mid-caps today. Federal Bank closed more than 6 per cent higher while South Indian Bank added over 4 per cent.