Banking, telecom and metal stocks take Sensex to a new lifetime closing high

16 December 2005

After closing lower for the last two days, the markets were expected to remain subdued today as well. However, heavy buying in select sectors helped the indices to surge ahead in afternoon trades after remaining subdued in the first half of the trading session.

Global cues were mixed as the US markets closed almost flat yesterday. The drop in crude oil prices helped to improve the sentiment, but Asian markets were mixed today with Korea and Indonesia losing more than a per cent each.

The indices opened with gains, but soon started a gradual decline which lasted till early afternoon. Both indices slipped in and out of red, but held within a narrow range around yesterday's closing levels.
The surge started later in the afternoon which continued till close. By then, the Sensex had gained nearly 150 points from the day's lows. Though the index could not go past the 9300 mark, it did manage a new lifetime closing high. The Nifty, however, fell short of its previous closing high by two points.

Banking stocks were all the rage today after the government indicated that it is considering higher FII limits in PSU banks. PNB added close to 4.5 per cent while SBI closed nearly 3 per cent higher. Allahabad Bank and Bank of India also closed with substantial gains.

Among the private sector banks, ICICI Bank gained over 4 per cent. HDFC added 3 per cent while HDFC Bank closed lower by nearly half-a-per cent.

VSNL was the biggest gainer among index stocks, adding nearly 5 per cent. MTNL closed with gains of over 4 per cent. Bharti Tele closed half-a-per cent higher.

Aluminium stocks gained ground on expectations of a further increase in prices. Hindalco closed with gains of close to 3.5 per cent while Nalco added over a per cent.

SAIL was the best performer among steel stocks, adding close to 2.5 per cent. However, Tata Steel closed marginally lower.
Infosys led the technology sector stocks with gains of over 2 per cent. TCS added over a per cent while Wipro gained over half-a-per cent.

Bajaj Auto was the biggest gainer among autos, closing over 1.5 per cent higher. Hero Honda, Maruti and Tata Motors all closed with gains of around a per cent each.

Sensex closed at 9284, a gain of 114 points, and the Nifty at 2810, higher by 31 points. Nifty December futures closed at a premium of 3 points to the spot index.

VSNL, PNB and ICICI Bank were the biggest gainers among Nifty stocks while L&T, Cipla and Zee Tele were the major losers.
US markets closed almost unchanged yesterday as lower crude prices affected energy stocks. An important manufacturing survey indicated that business growth is still strong which led to concerns that the Fed would extend its interest rate hikes. A substantial drop in consumer prices could not help the indices much.

The Dow closed almost flat while the S&P 500 and NASDAQ closed with losses of one-tenth of a per cent each.

Crude oil declined for the second day on forecasts of milder weather conditions by the end of this month. January futures on the NYMEX lost nearly 1.5 per cent to close at $59.99 per barrel. The commodity has lost another 40 cents per barrel in early European trades today.

Indian ADR's had a mixed day yesterday as some of them dropped substantially while some others gained ground. MTNL, Satyam and Wipro were among the gainers. HDFC Bank and Patni Computer closed with losses.

The government has denied permission to ONGC for its proposed $4 billion investment in Nigeria, including investments for acquisition of a 40 per cent stake in an oil field, further exploration and development. The proposal was expected to be cleared yesterday and it is not clear if the decision has been deferred or the proposal has been completely rejected.

However, the government has given permission to ONGC for investing up to $820 million for acquiring oil assets in Brazil. ONGC has bid for acquiring Exxon Mobil's 30 per cent stake in 2 Brazilian oil exploration blocks. The blocks are said to be very promising after a recent discovery with potential reserves of 400 million barrels.

Meanwhile, the government has allowed Indian Oil and Oil India to jointly acquire oil assets abroad. The companies have been allowed to set up a joint venture to bid for exploration blocks and downstream projects.

According to a news agency report, Reliance Industries has received permission from Airports Authority of India to set up aviation fuel stations in 12 non-metro airports. The company would set up the station and hand them over to the AAI after operating them for 5 years. The company has reportedly agreed to pay a fixed charge to AAI for the fuel sold from these stations.

VSNL would host the network operating centre for the under-sea telecom cable network SEA-ME-WE connecting South East Asia to Western Europe. The company has also been appointed as the network operator and would handle the day-to-day operations of the system. Bharti had announced this week that it has acquired an 8 per cent stake in the cable system.

Hindustan Lever would have an expatriate CEO after a long time. Unilever, the parent company of HLL, has appointed Douglas Baillie as CEO of HLL. Harish Manwani would remain as the chairman of the company.

The government is expected to invite bids from financial institutions for an 8 per cent stake in Maruti Udyog. The government had appointed independent advisors who have reportedly set a floor price. The government currently owns over 18 per cent of Maruti and the balance 10 per cent is expected to be offloaded if this round of selling is successful.

Mid-Cap Action

Mid-caps also recovered from yesterday's correction and the index closed with gains of nearly three-fourths of a per cent. The CNX Mid-Cap index added 27 points and closed the day at 3967.

Cadila Healthcare has announced that it has set up a joint venture with Bharat Serums and Vaccines. The two partners would hold equal stakes in the venture, which would develop cancer care products. The company has also filed a new drug application for a drug for inflammatory disorders with the Drug Controller.

The board of directors of Torrent Pharma has approved a bonus issue in the ratio of one share for every share held. The company would also split its Rs10 equity shares into two shares of Rs5 each. The company said shareholders would receive four shares of face value Rs5 each for every Rs10 share held now.

Dwarikesh Sugar has announced that its new sugar mill in UP has commenced commercial production. The new unit has a crushing capacity of 5,500 tonnes per day with a captive power unit of 9MW capacity. With this, the company's total cane crushing capacity has gone up to 12,000 tonnes per day.