Indices close higher after volatile trade as global indices hold firm

06 January 2006

A firm opening for the markets was expected as US indices had held on to their gains yesterday and crude oil declined. Asian markets held firm today as well, helped by the rally in US technology stocks. Korea, Shanghai and Indonesia were among the major gainers in the region.

Indian indices opened with marginal gains and inched up to the highs of the day by mid-morning trades. From there, the indices declined fast and the Sensex lost more than 100 points from the highs of the day by early afternoon.

A steady recovery in afternoon trades took the indices back into positive territory by late afternoon and they closed the day higher.

The Nifty managed a new intra-day lifetime high of 2922 and closed at a new lifetime closing high, helped by gains on ONGC and IPCL.

IPCL was the biggest gainer among index stocks, adding close to 7 per cent. ONGC recovered all of yesterday's losses, closing nearly 2 per cent higher.

HDFC Bank surged today and closed nearly 4 per cent higher. Among other banking stocks, ICICI Bank lost more than half-a-per cent while PNB lost a per cent. HDFC closed 2 per cent higher.

Metal stocks had a good day as SAIL and Hindalco closed with gains of 3 per cent each. Nalco, however, shed a per cent.

Telecom stocks made a come back after a few sessions of decline. MTNL added more than 3 per cent while Bharti closed nearly 1.5 per cent higher.

HCL Tech was the best performer among technology stocks, closing more than 4 per cent higher. Satyam added more than a per cent. However, TCS was the biggest loser among index stocks, closing more than 1.5 per cent lower.

Auto stocks had a subdued day Bajaj Auto gave up more than a per cent. M&M declined more than half-a-per cent. Maruti declined in early trades before regaining part of the losses.

Glaxo, Jet Airways, Cipla and HLL were the other losers among index stocks.

Sensex closed at 9640, a gain of 22 points, and the Nifty at 2914, higher by 14 points. Nifty January futures closed at a discount of 19 points to the spot index.

Broad US indices closed flat yesterday after profit guidance from Wal-Mart disappointed the markets. A downgrade of Boeing also resulted in subdued action for the indices. However, technology stocks maintained their uptrend for the third day helped by expectations of higher demand for semiconductors and other hardware.

The Dow and S&P 500 closed yesterday without much change. NASDAQ rose to almost a 5-year high with gains of over half-a-per cent.

Crude oil lost nearly a per cent yesterday as US inventory data showed an increase in natural gas stocks. Mild winter weather across the US also helped cool oil prices, which had gained almost 8 per cent over the last week. January futures on the NYMEX closed at $62.79 yesterday, a loss of 63 cents from the previous close. The commodity is back above $63 in early European trades today.

The government has fixed a floor price of Rs620 per share for the divestment of an 8-per cent stake to financial institutions. The floor price is at a discount to the prevailing market price of the stock. Domestic banks and institutions will have to submit financial bids by early next week.

Reliance Industries has floated tenders for the development of its gas fields in the KG basin, off the coast of Andhra Pradesh. The project involves a floating production facility as well as an onshore gas terminal. The company is planning to start commercial production by 2008.

Nalco is aiming to finalise its Middle East aluminium smelter project by next month. The project would have a capacity of 250,000 to 300,000 tonnes per annum and is expected to be completed by 2010.

A news agency quoting Nalco management said the company's domestic expansion plans are on tract. The company is investing over $1 billion to expand alumina smelter, bauxite mining and power generation capacities at existing locations.

Unconfirmed reports indicate that Tata Motors is planning to raise passenger vehicle prices by up to Rs20,000 per vehicle this month to offset higher input costs.

According to reports, TCS is planning to open a new centre in Poland. The new centre would employ around 1,500 employees and focus on financial services and IT services.

Oriental Bank of Commerce is planning to raise Rs500 crore from a subordinated debt issue to shore up its tier-II capital base. The bank is reportedly looking at suitable interest rates before coming out with the issue, which is expected to be completed by next month.

Mid-Cap Action

Mid-caps maintained their steady uptrend for the fifth straight session even as the frontline stocks turned volatile. The CNX Mid-Cap index gained 26 points and closed the day at 4203, a new lifetime high.

Andhra Bank would come out with a follow-on public issue to raise around Rs850 crore. Government stake in the bank would decline by more than 10 per cent to just over 51 per cent. The stock had seen a sharp jump in prices yesterday.

Confirming market rumours, Shasun Chemicals said it would buy the custom synthesis division of French pharma company Rhodia. The stock of Shasun had appreciated considerably over the last week on speculation about a deal in Europe. Financial details of the deal are not known and the deal is expected to be completed by the end of this financial year.

The custom synthesis unit of Rhodia provides other drug companies with chemical products to develop final drugs besides custom manufacturing services on contract basis. The French company had acquired the unit, which made losses of more than $8 million for the latest reporting quarter, for more than $500 million more than 5 years back.