Indices close lower after intra-day volatility

28 December 2005

At the bourses, the sharp swings of the last two days had not shown much intra-day volatility. When the indices declined on Monday and recovered yesterday, they moved mostly in one direction. Today, a day before the derivative settlement, the indices experienced considerable intra-day volatility.

The markets opened on a firm note and the Sensex went past 9350 in early trades, as the momentum continued from yesterday. However, selling pressure started by mid-morning and by noon the indices had lost all their gains.

Early afternoon saw a sharp decline and the Sensex slipped close to 9200, a decline of nearly 150 points from the day's highs. This was followed by an equally sharp pull back and the indices went back to positive territory.

More selling was seen in the last hour of trade and the indices slipped once again. However, they managed to stay considerably higher than the day's lows posted in early afternoon trades.

Auto stocks were weak today, after yesterday's strong performance. Tata Motors lost well over 2.5 per cent while Bajaj Auto lost over 2 per cent.

Hindalco lost over 2 per cent and led the weakness in the metal sector. SAIL declined over 1.5 per cent.

Among FMCG stocks, ITC gave up nearly 2 per cent while Tata Tea closed over 1.5 per cent lower.

ACC, Jet Airways and MTNL were the other major losers among index stocks.

Oil marketing stocks were the best performers today, as the decline in crude prices helped them close with gains. BPCL added well over 2.5 per cent while HPCL closed nearly 2.5 per cent higher.

HDFC was the best performer among banking and financial services stocks, closing nearly 2 per cent higher. SBI added nearly a per cent while OBC also closed a per cent higher.

SCI, Glaxo and Grasim were the other gainers among index stocks.
Sensex closed at 9258, a loss of 25 points, and the Nifty at 2794, lower by 12 points. Nifty December futures closed at a premium of two points to the spot index.

US indices saw their biggest fall in the last couple of months yesterday as lower crude prices led to a decline in oil stocks. Retail stocks were also weak as investors are sceptical of continued buoyancy in consumer spending.

All three major indices, the Dow, S&P 500 and the NASDAQ closed with losses of a per cent each.

Crude oil slipped further yesterday even as weather conditions across the US unexpectedly turned mild at the peak of winter. January futures on the NYMEX closed at $58.16 per barrel, recovering part of the early losses. The commodity is trading with marginal losses in early European trades today.

The NSE and BSE have decided to conduct a special trading session on 18 January for Reliance Industries. The one-hour special session would be for Reliance Industries shares only, without any circuit filters. The session is being held to help investors to arrive at the post de-merger prices of Reliance Industries.

The average traded price during the session would be used as the post de-merger price for Reliance stock and the indices would be adjusted accordingly.

The boards of Reliance Capital and Reliance Energy would meet during the first week of January to consider proposals for merger with newly formed Reliance Capital Ventures and Reliance Energy Ventures respectively. The two new holding companies are being formed to hold the current holdings of Reliance Industries in Reliance Capital and Reliance Energy.

Bharti Tele dropped nearly 5 per cent in early trades on rumours of accounting errors during earlier years. Unconfirmed reports indicated that the company had understated its losses for earlier years under the US GAAP. The stock recovered later and closed with losses of around a per cent.

ICICI Bank has sold part of its stake in Federal Bank to FII's, including Goldman Sachs, over the last few days. ICICI is understood to have brought down its stake in the south-based private bank from 20 to 12 per cent. The RBI had earlier asked shareholders of banks to bring down their stakes to 10 per cent or below. The stake sale was done at prices ranging between Rs170 and Rs176 per share.

ICICI is also reportedly in discussions with IFC, an arm of the World Bank, to sell a 10 per cent stake in Federal Bank.

Gail India has announced that it has started exploratory drilling in an offshore field off the coast of Bengal. Gazprom of Russia is the company's partner for this field. The company also said it has placed orders for the proposed Dahej - Uran and Kota - Vijaipur pipelines.

Reports indicate that Tata Steel is planning to raise $500 million through the external commercial borrowing (ECB) route.

The government is reportedly planning to sell off a 10 per cent stake in Neyveli Lignite. The government currently holds a 93 per cent stake in the company. The sale is expected to be made only to domestic financial institutions, as in the case of Maruti recently.

TCS has entered into an agreement with Apollo Hospitals to jointly develop software products for the healthcare sector. The tie-up would utilise the technology strengths of TCS and the domain expertise of Apollo for developing specialised products. TCS had signed a similar deal with SBI for developing banking related products.

Mid-Cap Action

Mid-caps did not see as much volatility as the frontline stocks today. The index held steady even as the frontline indices went through the sharp swings in afternoon trades and managed to close with marginal gains. The CNX Mid-Cap index gained three points and closed the day at 3961.

SRF Limited is reportedly in talks with European buyers, including a unit of French power utility EDF, for selling carbon credits. SRF had earlier signed a deal to sell half-a-million units per year of carbon credits with Shell. Reports indicate that forward prices of carbon credits are ruling around $5 per unit.

BK Birla group company Century Enka would buy back 30 per cent stake held by Dutch company Acordis for Rs105 crore. After the buy back, the shares would be extinguished which would raise the Birla group stake in the company close to 25 per cent. Acordis would have a residual stake of around 12 per cent.

Pipe manufacturer Man Industries has announced that it has won a new order worth Rs163 crore from Gail India for supply of coated pipes.