Indices close lower as results season kicks off this week

09 January 2006

Indices opened firm and the Sensex saw a new lifetime intra-day high of 9690. The Nifty also recorded a new high of 2927 in early trades. However, traders were edgy ahead of the earnings announcements and both indices declined for the rest of the session.

The results season kicks off this week with Infosys expected to announce its quarterly numbers on Wednesday. Corporate numbers would be very important for the markets at this point as they have surged for the last two months of expectations of a strong performance.

Pharma stocks were among the best performers in today's trading as reports of big overseas drug companies eying stakes in smaller Indian pharma companies. Dr Reddy gained close to 4 per cent while Ranbaxy ended nearly 2.5 per cent higher.

Jet Airways was the biggest gainer among index stocks, closing nearly 5 per cent higher. The stock surged on reports that Kingfisher Airlines is no longer interested in acquiring Air Sahara. Jet Airways is rumoured to be interested in acquiring its competitor, though the company has denied it.

Telecom stocks continued to attract interest with MTNL adding more than 3 per cent. Bharti gained over a per cent.

IPCL continued its surge and closed another 4 per cent higher. Dabur, Tata Power and BHEL were the other major gainers among frontline stocks.

Technology stocks came under selling pressure ahead of quarterly numbers. Wipro was the biggest loser, closing 2.5 per cent lower. Satyam lost 2 per cent.

Banking stocks were also weak led by PNB which lost more than 1.5 per cent. ICICI Bank and SBI also gave up nearly 1.5 per cent each.

SAIL, Tata Steel, Maruti, Reliance Industries and Gujarat Ambuja Cement were the other major losers.

Sensex closed at 9583, a loss of 57 points, and the Nifty at 2910, lower by 4 points. Nifty January futures closed at a discount of 17 points to the spot index.

Maruti announced price hikes of between Rs3,000 to Rs15,000 for its various passenger car models. The company said the hike was warranted due to higher input and freight costs.

BPCL's Mumbai refinery would operate at its expanded capacity of over 12 million tonnes per annum from this year. The company has reportedly tested the refinery at the higher capacity. BPCL expects domestic demand for petroleum products to rise more than 3 per cent this year and said its imports would be higher by 20 per cent because of higher refining capacity.

SBI has raised the interest rates on domestic deposits by 25 to 50 basis points. The bank is under pressure to grow its domestic deposits following the redemption of $7 billion India Millennium Deposits during the last week of December. The bank was hoping to retain 15-20 per cent of the IMD funds as fresh deposits and it is not yet known how much has actually been re-deposited.

Reliance Industries is reportedly seeking compensation from the government for selling petroleum products below cost prices. The company is seeking similar financial support as currently given to PSU marketing companies. The company said it operates around 900 retail stations and command a 9 per cent share in retail sales.

Mid-Cap Action

Mid-caps continued their up trend from last week and closed with gains for the sixth straight session even as the frontline stocks declined. The CNX Mid-Cap index gained 35 points and closed the day at 4238, a new lifetime high.

The RBI has proposed the merger of Ganesh Bank of Kurundwad with Federal Bank. The RBI has given both the banks around two week's time to respond to the merger scheme.

Federal Bank said separately that it is interested in acquiring the privately held Ganesh Bank. The latter has around 30 branches in Maharashtra and Karnataka. RBI had imposed a moratorium on Ganesh Bank because of its precarious financial position. Federal Bank is understood to have assured the RBI that it would pay the depositors of Ganesh Bank fully.

BEML, a leading PSU manufacturer of construction and defence equipment, has reported a net profit of Rs56 crore for the December quarter as compared to Rs24 crore for the same quarter of previous year. Total revenues increased from Rs326 crore to Rs564 crore. The company's board has recommended an interim dividend of 30 per cent.