Indices inch closer to all-time highs as rally continues

24 November 2005

Most analysts had predicted an extremely volatile session on the settlement day of the November series of derivatives contracts. Once again, the markets proved most of them wrong as it maintained a steady up trend. Intra-day volatility was limited and except for a dip in the last half hour, the uptrend was never under threat.

Global cues were encouraging today as well with US markets closing higher yesterday. The uptrend in oil prices was halted yesterday helping Asian markets to continue their rally.

Today's rally was very broad-based, with most large stocks participating. The losses on the declining ones were not considerable as the Sensex went past the 8750 mark in intra-day trades.

The indices closed at their highest levels since early October, their second highest closing ever. With an extended trading week of six days, including Saturday when a special trading session would be held, most traders were willing to hold on to their long positions.

Tata Chemicals was the star of the day, closing well over 5 per cent higher on news of an overseas acquisition.

FMCG stocks continued their run from yesterday, once again led by ITC. The stock added well over 4 per cent. HLL followed with gains of nearly 3 per cent.

Banking stocks had a good day, led by OBC and ICICI Bank. The latter saw a late surge which helped it close more than 2 per cent higher. HDFC added more than 3 per cent.

M&M was the best performer among autos, closing more than 2 per cent higher.

Cipla, Shipping Corp and Grasim were the other gainers among index stocks.

Select technology stocks saw sharp declines in the last half hour of trade. HCL Technologies dipped more than 4 per cent and then recovered partly to close more than 3 per cent lower. Satyam closed half a per cent lower.

Pharma stocks saw some selling pressure even as the markets remained strong. Ranbaxy was one again the biggest loser, closing more than a per cent lower. Dr. Reddy lost close to half a per cent while Glaxo lost close to two-thirds of a per cent.

HPCL and Nalco were the other losers among index stocks.
Sensex closed at 8744, a gain of 106 points, and the Nifty at 2635, higher by 26 points. Nifty December futures closed at a premium of 10 points to the spot index.

Tata Chemicals, ITC and HDFC were the major gainers among Nifty stocks while HCL Technologies, Zee Tele and ABB were the major losers.

Expectations that consumer spending would remain high during this holiday season helped US markets to maintain their up trend yesterday. Lower fuel costs are expected to leave more cash with consumers which should boost demand for consumer products.

The Dow and S&P 500 added around one third of a per cent each. NASDAQ also closed more than a quarter of a per cent higher. The Dow is nearing the highs posted in March while S&P 500 and NASDAQ are trading at their 4-year highs.

Indian ADR's had a good day yesterday as the technology stocks bounced back. Wipro added around 2 per cent while Satyam closed over 1.5 per cent higher. Tata Motors, VSNL and HDFC Bank were the other big gainers.

Higher crude oil stocks as per the weekly US inventory data led to a marginal decline in crude oil prices yesterday. Crude oil futures for January delivery lost 13 cents to close at $58.71 on the NYMEX yesterday.

Tata Chemicals has informed the exchanges that the company has signed two agreements to acquire a majority stake in UK-based Brunner Mond group. The company has not disclosed the cost of acquisition or other details as it said it is the process of finalising the deal. The acquisition may be done directly or through a subsidiary of the company.

Brunner Mond is the second largest soda ash manufacturer in Europe and one of the top five producers globally. It has manufacturing plants in UK, Netherlands and Kenya. The group employs over 1,000 people and has a turnover of over $250 million.

Media reports suggest that Tata Steel is evaluating a possible acquisition of Highveld Steel of South Africa. The target company has a capacity of 1 million tonnes per annum and is said to be the largest manufacturer of vanadium in the world. Vanadium is used as a steel additive to manufacture alloys. Tata Steel has not confirmed these reports, but mentioned that the company is evaluating many companies for acquisition.

Tata Steel management also said that the much reported second acquisition in South-east Asia may take some more time. The company said it has completed the land acquisition for the new steel plant in Orissa and expects to place orders for machinery within the next three months.

PSU oil companies are reportedly in discussions with overseas companies to set up joint ventures and form strategic partnerships for exploration. ONGC Videsh is said to be talking to companies from South Korea and China for joint exploration. The company is also believed to be in discussions with Gazprom of Russia for the next phase of Sakhalin project.