Reliance Industries and ONGC help indices close higher

29 December 2005

Strength across the Asian markets today and a positive closing, though marginal, by the US indices yesterday helped the Indian indices to shrug off the bounce back in oil prices and close higher. Today was the last day of the December series of derivative contracts.

The indices opened with gains and drifted downwards till noon. Buying in frontline stocks took the indices past their early highs in afternoon trades. After another decline and consolidation, the indices surged in the last hour and closed at the day's highs.

Reliance Industries held firm for most of the session as the stock is attracting good interest from funds. The stock closed the day with gains of over 2 per cent and also saw good roll-over in the derivative segment. IPCL also closed more than 2 per cent higher.

ONGC saw good buying in the afternoon session, which helped the indices considerably. The stock closed with gains of nearly 2 per cent, helped by the sharp recovery in crude prices as well as covering of futures positions.

Dabur was the best performer among index stocks as the record date for the proposed bonus issue is nearing. The stock closed 4 per cent higher.

Metal stocks generally had a good day, led by SAIL. The stock added more than 3.5 per cent on reports that the SAIL management is pitching for a mega merger of all steel PSU's into the company.

Hindalco recovered from yesterday's losses and closed more than 2 per cent higher. Tata Steel closed marginally lower.

Dr Reddy was the biggest loser among index stocks, closing more than 1.5 per cent lower. Among other pharma stocks, Glaxo also closed lower. However, Cipla closed with gains of over 3 per cent.

Banking stocks had a weak day as most of the larger bank stocks declined. PNB and SBI lost over half-a-per cent each while ICICI Bank closed nearly half-a-per cent lower. Among the smaller banks, UTI Bank, Canara Bank and Kotak also closed with losses.

HDFC closed the day with gains of 2.5 per cent while OBC ended more than 1.5 per cent higher.

Auto stocks had a weak day as most of them ended with losses. Maruti and Hero Honda ended with losses of around half-a-per cent each. Bajaj Auto also ended lower. Tata Motors bucked the trend and closed with gains of over 1.5 per cent.

VSNL, Gail and Tata Chemicals were the other losers among index stocks.

Sensex closed at 9323, a gain of 65 points, and the Nifty at 2822, higher by 28 points. Nifty December futures closed at a premium of 2 points to the spot index.

US indices closed marginally higher yesterday as oil stocks recovered after a sharp recovery in crude oil prices. Survey showing a sharp improvement in consumer confidence for the month of December also helped improve sentiment.

The Dow closed with gains of close to one-fifth of a per cent. S&P 500 and the NASDAQ closed higher by around one-tenth of a per cent each.

Crude oil went past the $60 per barrel mark in intra-day trades yesterday as Iran asked for a production cut by OPEC countries next year. February futures on the NYMEX closed at $59.82 per barrel. The commodity is trading nearly half-a-per cent lower in early European trades today.

The board of Indian Oil has approved a change in the merger ratio with IBP. The company would now issue 1.1 shares for every IBP share as against the earlier ratio of 1.25 shares of Indian Oil for every IBP share. The change in ratio was after a government directive.

ONGC is reportedly doing a feasibility study on developing a gas field off the coast of Myanmar. The field is believed to hold reserves of around 3- trillion cubic feet of natural gas. If feasible, ONGC is planning to bring the gas to India.

Neyveli Lignite saw a sharp drop in afternoon trades after the government deferred the decision to divest part of the stake. The decision has been deferred for further consultations and no time frame has been announced.

The management of Union Bank confirmed today that the bank is planning a follow-on public issue to raise capital. The bank is awaiting regulatory approval for raising up to Rs500 crore.

According to newspaper reports, Cipla has signed a product development and manufacturing pack with German drug company Boehringer. The deal is for manufacturing the formulation for a hypertension drug, currently marketed by the German company.

Shipping Corporation would hold 26 per cent stake in the consortium which has won the LNG shipping contract from Petronet LNG. The contract is for transportation of 2.5-million tonnes per annum of LNG from Qatar to India for the next 25 years. The total value of the order is around $700 million over this period.

Mid-Cap Action

Mid-caps also rose in line with the trend in the frontline indices. Heavy buying was seen in select PSU mid-cap and textile stocks. The CNX Mid-Cap index gained 25 points and closed the day at 3986.

The board of Gujarat NRE Coke has approved a proposal to merge FCGL Industries with itself. Shareholders of FCGL would receive one share of Gujarat NRE for every share held. The ratio is beneficial to FCGL shareholders and the stock was locked in the 10 per cent upper circuit.

Gujarat NRE board has also approved plans to raise up to Rs500 crore from an overseas issue of equity or convertible bonds.

Gujarat NRE Coke has also informed the exchanges that it has started commercial production at its newly built steel unit. The company is also in the process of setting up a captive power unit with a capacity of 20mw. Gujarat NRE had set up a 25mw wind power unit earlier.