Reliance and telecom stocks lead market bounce back

27 December 2005

After yesterday's sharp fall, a recovery was expected today but the strength of the bounce back surprised many. As expected, markets are volatile ahead of the derivative settlement due on Thursday.

The indices opened weak and the Sensex went close to the 9000 mark in early trades before recovering. The rally maintained the momentum throughout the day and by close the Sensex had added more than 200 points from the lows of the day.

Strong buying was seen in Reliance Industries after the announcement that the holding companies to be spun off would be listed within the next six months. The stock added more than 4 per cent and was responsible for today's rally to a considerable extent.

Telecom stocks, which had lost heavily in yesterday's sell off, recovered part of their losses today. VSNL, which lost more than 10 per cent yesterday, added close to 5 per cent. MTNL closed more than 4 per cent higher while Bharti added nearly 3.5 per cent.

Auto stocks also bounced back smartly, led by M&M, which closed nearly 5 per cent higher. Tata Motors closed higher by more than 3.5 per cent.

Technology stocks had a good day today on expectations of strong first quarter results. Satyam was the biggest percentage gainer, closing nearly 4 per cent higher. TCS closed nearly 2 per cent higher while Infosys added over 1.5 per cent. Wipro closed nearly a per cent higher.

Tata Chemicals was the biggest gainer among the index stocks, closing more than 5 per cent higher. The recent overseas acquisition and positive outlook given by the management attracted a lot of buying interest in the counter.

Banking stocks attracted heavy buying and smaller bank stocks closed with significant gains. Canara Bank, Federal Bank, UTI Bank and Bank of India were among the biggest gainers.

ICICI Bank was the best performer among larger banking stocks, closing more than 3 per cent higher. SBI and PNB added over 2.5 per cent each.

Gail India, Reliance Energy and BHEL were the other significant gainers among index stocks.

Sensex closed at 9283, a gain of 197 points, and the Nifty at 2806, higher by 56 points. Nifty December futures closed at a premium of eight points to the spot index.

Tata Chemicals, VSNL and M&M were the major gainers among Nifty stocks while HDFC and ONGC were the only losers.

Crude oil declined yesterday after reports of warmer weather across the US, which is expected to cool demand for heating oil. January futures on the NYMEX are trading below the $58 per barrel mark in early European trades today.

The ADAE group is planning to list the four holding companies, formed by the restructuring of the Reliance group, by June of next year.

Reliance Industries has announced 25 January as the record date for allotment of shares in the holding companies to existing shareholders.

Out of the four holding companies, Reliance Communication Ventures, Reliance Capital Ventures and Reliance Energy Ventures would hold controlling stakes in Reliance Infocomm, Reliance Capital and Reliance Energy respectively. The fourth company, Global Fuel Management, would have agreements with Reliance Industries for supply of natural gas.

The board of ONGC has cleared sale of the company's holdings in Indian Oil and Gail India. The company said it is only an enabling approval and the stakes would be sold only when huge investments are required in overseas projects. ONGC's holdings in the two companies are currently valued at over Rs6,000 crore.

According to media reports, Gail India is in talks with overseas petrochemical companies for possible partnerships. The company is reportedly keen to rope in partners for its proposed petrochemical projects in Orissa and Kerala. The company has an investment outlay of over Rs11,000 crore for the two gas-based projects.

Bank of Baroda would come out with a follow-on public issue in January to raise around Rs2,000 crore. The bank management said it would also make a bid for stock broking company UTI Securities, which is currently government owned.

NTPC has announced that it would acquire a majority stake in a power plant based in Bihar. The company would hold 51 per cent while the Bihar State Electricity Board would hold the balance in the 220 MW plant.

Mid-Cap Action

Mid-caps followed the broad markets and bounced back strongly today. By the end of the session, mid-cap index had added 2 per cent. The CNX Mid-Cap index gained 78 points and closed the day at 3958.

Bank of Rajasthan has informed the exchanges that it has raised Rs70 crore in the form of subordinated bonds as tier-II capital. The bonds having varying maturities were placed privately and carry interest rates above 8 per cent per annum.

Scandent Solutions has informed the exchanges that its BPO subsidiary has won a 4-year contract from Australia. The order for processing worker's compensation claims is reportedly worth over $60 million.

Nicholas Piramal has informed the exchanges that it has signed a 7-year agreement with Pfizer International for research and development services for its animal health division. Financial details of the deal were not disclosed.