Indices correct on higher oil prices and profit booking

06 December 2005

The markets have been trying to consolidate for the last few sessions and the indices have moved within a range. The spike in crude oil prices has made the sentiment slightly negative and global markets are also searching for a direction.

The decline of rupee against the US dollar is attracting investor interest to stocks of export-oriented sectors like technology. Though overseas inflows into the market have been steady, the volume of inflows is not enough to generate momentum at these levels.

The indices were volatile today as strong buying in select sectors was offset by profit booking in other sectors. The indices opened lower and after a recovery, dipped again in mid-morning trades to the day's lows.

Strong buying in frontline technology stocks like TCS, Infosys and Wipro led to a sustained rally which lasted till late in the afternoon. ONGC surged ahead on higher crude oil prices and news of an interim dividend to be announced shortly.

Sectors like oil marketing, capital goods, pharmaceuticals and cement continued to see profit taking today as well. Some of the banking stocks saw a sell-off in late trades.

The indices were trading with gains of nearly a per cent each when a sharp sell off in the last hour saw them drop sharply. Both the Sensex and Nifty lost all their gains and slipped into red. The Nifty, helped largely by ONGC and TCS, managed to recover marginally and close in the positive.

ONGC was the biggest gainer among index stocks, closing 3 per cent higher. Power utility stocks had another good day as Reliance Energy closed nearly 2 per cent higher and Tata Power added close to 1.5 per cent.

Among the technology stocks, TCS added close to 1.5 per cent while Wipro closed over a per cent higher. Infosys and Satyam also closed higher.

In the pharma sector, Glaxo continued to lose ground and closed more than 2.5 per cent lower. Sun Pharma gave up nearly 1.5 per cent. Ranbaxy closed lower while Dr. Reddy closed flat.

BPCL declined more than 2.5 per cent while HPCL closed over 1.5 per cent lower. Indian Oil also lost ground and closed 2 per cent lower. Stocks of oil marketing companies have given up a major part of their recent gains as crude oil is once again seeing an upsurge.

SBI gave up all its early gains and closed nearly 1.5 per cent lower. ICICI Bank gave up half a per cent on the last day of its public offer. HDFC Bank, OBC and PNB gave up nearly a per cent each. HDFC added over a per cent.

In the engineering and capital goods space, ABB was the biggest loser closing 2 per cent lower. BHEL gave up more than 1.5 per cent while Siemens also closed lower. L&T ended more than half a per cent lower.

Gujarat Ambuja was the biggest loser among cement stocks, closing more than 2 per cent lower. Grasim also declined by 2 per cent while ACC closed with marginal gains.

Sensex closed at 8815, a loss of 8 points, and the Nifty at 2662, higher by a point. Nifty December futures closed at a discount of 8 points to the spot index.

ONGC, Tata Tea and Nalco were the major gainers among Nifty stocks while Glaxo, BPCL, and ABB were the major losers.

US markets declined yesterday as investors once again started worrying about oil prices after a few weeks. The uptrend in the last few weeks has been partly fuelled by lower oil prices which were expected to boost consumer spending. With no other positive developments, the markets drifted downwards even as oil stocks gained.

The Dow closed more than a third of a per cent lower while the S&P 500 gave up one quarter of a per cent. Technology stocks were worse off and the NASDAQ lost more than two-thirds of a per cent.

Crude oil surged above $60 per barrel mark after a gap of nearly a month. Forecasts of colder weather conditions continue to drive oil prices upwards. January crude futures on the NYMEX went past the $60 per barrel mark in intra-day trades before closing with gains of a per cent at $59.91. The commodity is trading lower by half a per cent in early European trades today.

The High Court of Mumbai is expected to give its decision on the Reliance Industries de-merger later this week. A minority shareholder had objected to the scheme while the company argued that since the proposal has been accepted by more than 99 per cent of shareholders it should be approved.

The board of ONGC would meet later this week to consider an interim dividend. The government had issued a directive to profit making PSU's to increase the dividend payout.

Maruti has announced that it would recall around 2,000 units of its passenger van model Versa to rectify faulty exhaust systems.

Satyam Computer is planning to set up a new development centre at Nagpur in Maharashtra. The company has signed an agreement with a state government body to acquire 100 acres of land in the new Nagpur special economic zone. (See: Satyam plans to locate new facility at Nagpur)

Media reports indicate that SBI is planning to securitise part of its asset portfolio this year. The reports suggest that the bank is looking at raising Rs5,000 to Rs10,000 crore through the process. Securitisation involves selling a part of a bank's assets, like advances to customers, to a financing company for cash upfront. Securitisation helps the seller to convert part of the assets in its books into cash.