Indices give up early gains in late noon sell-off

02 December 2005

Gains across most global markets helped the indices to continue from yesterday's strong close and open with significant gains. The Sensex opened over 9000 and both indices went on to record new lifetime highs in early trades.

Sensex set a new intra-day lifetime high of 9058 and the Nifty's high point was at 2731.

The indices declined by mid-morning, but recovered and went close to the early highs by noon. The new controversy in parliament over the Iraqi oil-for-food scandal led to some nervousness and led to a decline in markets.

The indices recovered once again and made another attempt at the early highs in afternoon trades. The last hour saw a sharp fall in the indices as they gave up all of their gains and slipped into the red within minutes. The Sensex recovered in the closing minutes and managed to close with marginal gains while the Nifty closed in the red.

Infosys was the star of today's trade among frontline stocks. The stock surged ahead even as other frontline stocks remained subdued. After surging more than 3.5 per cent by afternoon, Infosys gave up part of its gains and closed nearly 2.5 per cent higher.

Among the other technology stocks, Satyam gave up more than a per cent while Wipro and TCS closed lower. HCL Technologies added over 2 per cent.

FMCG stocks, except HLL, made a comeback today. ITC closed more than a per cent higher while Dabur added close to 2 per cent. HLL have up nearly a per cent.

Auto stocks were weak in today's trade as the markets were slightly disappointed with November volume sales. M&M gave up nearly 1.5 per cent while Tata Motors dropped a per cent. Maruti, Bajaj Auto and Hero Honda closed lower.

Ranbaxy gave up part of the previous days' gains and closed more than a per cent lower. Dr Reddy's also declined around a per cent while Glaxo lost over 2 per cent. Cipla added nearly 2 per cent on reports that it would export anti-bird flu vaccine.

Among the banking stocks, ICICI Bank was very firm in early trades on reports of a good response to its public issue which opened yesterday. The stock gave up most of its gains and closed marginally higher. (See: ICICI Bank: Is it a good buy for small investors?) SBI and HDFC Bank also closed lower. PNB lost nearly 2 per cent.

Cement stocks remained firm in today's market led by Grasim, which closed more than a per cent higher. ACC and Gujarat Ambuja also closed with gains.

Tata Steel maintained its uptrend, which started this week after remaining subdued for most of November. The stock closed nearly 2 per cent higher.

Sensex closed at 8962, a gain of 17 points, and the Nifty at 2698, lower by a point. Nifty December futures closed at a premium of 4 points to the spot index.

VSNL, Jet Airways and Infosys were the major gainers among Nifty stocks while HPCL, Glaxo and PNB were the major losers.

The bounce back in oil prices which helped oil stocks and data showing lower inflation helped the US markets to close with significant gains yesterday. Reports that the US manufacturing sector's growth declined marginally for the month of November as compared to the previous month led to renewed hopes that the Fed would stop hiking rates.

The Dow added close to a per cent while the S&P 500 ended with gains of over 1.2 per cent. Technology stocks continued to rally, led by Intel, and the NASDAQ index closed more than 1.5 per cent higher.

Crude oil continued its rally from the previous day and closed with gains of well over 1.5 per cent yesterday. Fresh forecasts of colder weather during this winter led to fresh buying in the commodity. January crude oil futures on the NYMEX added $1.15 per barrel to close at $58.47 per barrel yesterday. In early European trades today, crude is trading with gains of half a per cent.

Media reports indicate that Indian Oil has submitted a non-binding bid for Canadian exploration company Niko Resources. These reports suggest that the bid amount is in the region of $1.4 billion. Niko Resources is a partner in many Indian exploration fields, including some of the fields operated by Reliance. Indian Oil is also said to be interested in a French exploration company.

ONGC said it would invest over Rs13,500 crore in domestic exploration and production during the next financial year. The company is planning a total capital investment of over Rs14,000 crore during that year. The company management is confident that output from the Bombay High oil field would recover to its earlier levels by next March.

Jet Airways is planning to expand its global network and is evaluating services to major cities in Europe, Africa, the US and South-east Asia. The airline is currently servicing London and select cities in South-east Asia like Singapore. The airline said deliveries of wide-bodied long-haul aircrafts which it had ordered recently would start from the first quarter of 2007. In the short term the company is planning to take two more long-haul aircrafts on lease.

Tata Motors has reported a 9 per cent increase in sales volumes for the month of November as compared to the same month of previous year. Weak growth in passenger vehicle sales was compensated by a 12 per cent increase in commercial vehicle sales.

Mahindra & Mahindra has reported marginally lower sales volumes in passenger and commercial vehicles for the month of November. Domestic sales declined by 2 per cent while total sales, including exports, were lower by a per cent. However, tractor sales increased by 19 per cent during the month.

Reliance Industries has reduced petrochemical prices across the board. The prices of polyethylene, polypropylene and PVC have been reduced by nearly 10 per cent each. POY prices have been reduced by 9 per cent while PSF prices have come down by more than 3 per cent.

ONGC has signed an agreement with British Gas India for joint exploration of 3 deepwater gas blocks in the KG basin. Both companies would hold equal stakes and BG India would pay $15 million upfront after receiving government approvals. Both companies have also agreed to cooperate on other exploration opportunities in future.

Mid-Cap Action

Mid-caps also mirrored the movement in frontline stocks and gave up part of their early gains by afternoon. They however managed to survive the major sell-off in frontline stocks and the mid-cap index finally managed to close the day with gains of more than one-third of a per cent. The CNX Mid-Cap index gained 16 points and closed the day at 3900.

A consortium including Varun Shipping has won a 25-year LNG shipping contract from Petronet LNG. Other members of the consortium are Indian Oil and a Belgian company. The consortium partners would set up a new company in which Petronet would take a 23 per cent stake. Varun Shipping and Indian Oil would hold 26 per cent each.

The consortium would acquire a new LNG vessel which would be used for importing 2.5-million tonnes of gas for the proposed Kochi project of Petronet. Total revenues over the 25 year contract period is estimated at Rs3,200 crore. (See: Petronet LNG tender: Varun Shipping's consortium shortlisted)

Kinetic Motor is planning to export scooters and motorcycles to the US and Europe. The company would be exporting in association with Italian two-wheeler company Italjet, with which Kinetic had signed a manufacturing and marketing agreement recently. All the models being planned for export would be from the Italjet stable.