Indices give up early gains and close with marginal gains

10 November 2005

Markets opened the day with gains and after some initial volatility rallied ahead in morning trades, maintaining the momentum from the recent sessions. Reports of FII selling in the derivatives segment in yesterday's trading set off a sharp decline which saw the indices slipping into the red before noon.

The indices remained mostly sideways for the rest of the session except for the some buying in the last 15 minutes of trade. Late buying in heavyweights like ONGC helped the indices to recover from their losses.

The Nifty managed to close with gains of close to half a per cent when the Sensex closed unchanged. Strong gains on stocks like ONGC, which has a higher weight on the Nifty, and ABB, which is not represented on the Sensex, helped the Nifty considerably.

Oil stocks were the stars of the day with ONGC leading from the front. The stock was trading with gains of over 2.5 per cent in late afternoon trades before closing 2 per cent higher.

Stocks of oil marketing companies saw a lot of buying interest after crude oil prices dipped further yesterday. All the three major stocks in the sector, Indian Oil, HPCL and BPCL added around 4 per cent each. Gail was another gainer from the oil & gas space.

Strong gains was seen in engineering stocks BHEL and ABB after the government announced that it would call for bids for setting up large power plants. BHEL added close to 4 per cent while ABB gained over 5 per cent. L&T closed lower.

Metal stocks were helped by strong gains in Hindalco, which closed with gains of over 5 per cent. Tata Steel also closed with gains. SAIL lost a per cent.

Among the auto stocks, Bajaj Auto saw some amount of profit booking after its strong rally in recent days and closed 2 per cent lower. Hero Honda also closed lower. Tata Motors and Maruti had a better day as both stocks closed with gains.

Dr. Reddy's also saw some profit booking and closed almost 2 per cent lower. Ranbaxy recovered from early losses after an announcement from the company and closed nearly a per cent higher. Glaxo also closed higher by 2 per cent.

Technology stocks had a good day as Infosys recovered from yesterday's losses, closing almost 2 per cent higher. TCS also added close to a per cent. Satyam closed a per cent lower while Wipro closed the day with marginal gains. HCL Technologies added over a per cent.

Among the FMCG stocks, HLL gave up over 2 per cent and ITC closed with losses of more than a per cent. Colgate also closed lower.

Sensex closed flat at 8309 and the Nifty at 2501, higher by 12 points. Nifty November futures closed at a discount of 10 points to the spot index.

ABB, Hindalco and BPCL were the major gainers among Nifty stocks while HLL, Bajaj Auto and HDFC were the major losers.

US markets closed marginally higher yesterday as the frontline indices could not hold on to early gains. The early part of the session saw reasonable gains after a further drop in oil prices. Reports of violence in the Middle East pulled down the indices towards close.

The Dow added one-tenth of a per cent while the S&P 500 gained one-fifth of a per cent. The NASDAQ also closed the day one-fifth of a per cent higher.

Indian ADR's had a relatively good day yesterday in the US markets with some stocks posting very strong gains. Dr. Reddy was the biggest gainer, adding more than 6 per cent. MTNL was another major gainer. VSNL and Tata Motors were among the losers.

Crude futures declined well over a per cent yesterday and went below the $58 per barrel mark for the first time in three months. Markets saw some selling as senior officials from large US oil companies appeared before a committee of the US Congress to justify high oil prices. November futures on the NYMEX lost 78 cents and closed at $58.93 to a barrel. Crude is trading lower in early European trades today.

Satyam Computers has sold its remaining stake in internet services company Sify to a private equity firm. The company has sold its 23 per cent stake for $62.5 million. Sify was originally promoted by Satyam in the last nineties and had become a drain on its financials. The company had progressively reduced its stake in Sify over the last few years. Sify is listed on the NASDAQ.

Tata Steel will form a joint venture with Blue Scope Steel of Australia to produce coated steel products and pre-engineered buildings. The JV would target markets in India and other parts of South Asia. A new plant is expected to come up at Jamshedpur at a cost of close to $200 million to produce metal coated and painted steel. Both companies would hold equal stake in the JV.

A Norwegian court has ruled in favour of Ranbaxy on a process patent for atorvastatin, a cholesterol drug. The court ruled that the company's process is non-infringing on Pfizer's patent on the drug. However, the court has ruled in favour of Pfizer on a patent for an intermediate compound. Pfizer markets atorvastatin under the brand name Lipitor, which is one of its largest selling brands.

Legal success in Europe is critical for Ranbaxy which has challenged the patent extension awarded to Pfizer in the US. Positive verdicts in Europe would strengthen the company's case in the US, where a verdict is expected by the year end.

Media reports suggest that ICICI Bank is planning to offload a 10 per cent stake in Asset Reconstruction Company of India Limited (Arcil) to private equity firms and other financial investors. The move follows yesterday's government announcement increasing the foreign investment limit in asset reconstruction or distressed asset buyout companies to 49 per cent. ICICI Bank currently holds close to 30 per cent of Arcil.

A Brazilian bus building company has claimed that it is in talks with Indian commercial vehicle companies, including Tata Motors and Ashok Leyland. The company is a leader in the South American markets and is looking to expand its presence in Asia. Ashok Leyland later denied the reports.

JSW Steel has formally signed the agreement with the government of Jharkhand to set up an integrated steel plant in the state. The plant, to be set up at a cost of Rs35,000 crore is expected to start production in 2010.

HCL Technologies has announced that it has received a multi-year multi-million dollar order from US based software company Autodesk to provide remote infrastructure management services. HCL would provide offshore application support and database management services on platforms like SAP and Siebel under the contract.

The board of directors of Hindalco is expected to clear the price of its proposed rights issue this Saturday. The company is issuing shares in the ratio of 1 share for every 4 shares held to finance expansion plans.

Mid-Cap Action

Trading in mid-caps was also subdued as some of the stocks saw correction on profit booking while select others surged ahead. Momentum buying was seen in some of the major mid-cap stocks. The CNX Mid-Cap index gained 10 points and closed the day at 3651.

Paradyne Infotech got listed on the exchanges today after its recent IPO. The stock which was issued at Rs42 opened on the NSE at Rs50. It went on to touch a high of Rs83 before closing the day at Rs76.

Strong buying was seen in stocks of logistics companies in today's trade. Aegis Logistics, TCI, Gati and Gateway Distriparks were among the biggest gainers.

Rumours about a large foreign IT company acquiring Polaris resurfaced after reports that a team from IBM visited the company's facilities. Speculation about Citibank selling its stake in Polaris has been floating for some time now after it sold its stake in I-Flex to Oracle. The potential buyers being talked about include IBM and EDS. The stock gained over 5 per cent in early trades and closed more than 4 per cent higher.