Indices give up early gains and close marginally lower

13 January 2006

After two days of losses, the indices opened the day with a positive gap as traders turned hopeful about corporate numbers to be announced over the next few weeks. Recovery in ONGC and Infosys, which had led yesterday's decline, helped turn the sentiment in early trades.

Both indices had gained more than a per cent each by mid-morning trades before selling pressure led to a decline around noon. After trading sideways for sometime, the indices once again moved up and went close to the early highs.

The last hour saw a sharp sell-off as there was no buying support to absorb the selling from intra-day traders. The indices gave up all their gains and closed marginally in the negative.

ONGC recovered smartly from yesterday's losses and closed more than 2.5 per cent higher. The stock was singularly responsible for preventing further losses on the indices.

M&M was the best performer among index stocks closing more than 3 per cent higher.

L&T, HCL Technologies and Gujarat Ambuja Cements were the other major gainers among index stocks.

ICICI Bank gained in early trades on announcement of a hike in lending rates but gave up part of the gains and closed nearly a per cent higher.

Other banking stocks had a bad day as HDFC Bank led the decline with a fall of 2 per cent. Oriental Bank and PNB also lost more than 1.5 per cent each.

Metal stocks were the worst hit in today's trade as Nalco lost nearly 3.5 per cent. SAIL gave up nearly 3 per cent while Hindalco lost more than 1.5 per cent.

Jet Airways continued its downtrend today as well and closed more than 3 per cent lower.

BHEL, TCS and Zee Tele were the other major losers among large stocks.

Sensex closed at 9374, a loss of 7 points, and the Nifty at 2847, lower by 4 points. Nifty January futures closed at a discount of 25 points to the spot index.

Major US indices closed lower yesterday on earnings downgrades of major companies by leading brokerages. Rising tensions between Iran and western countries on the nuclear issue also cast its shadow on the markets.

The Dow declined nearly three-quarters of a per cent while the S&P 500 and the NASDAQ lost nearly two-thirds of a per cent each.

Crude oil closed steady at $63.94 per barrel yesterday, giving up early gains. February futures on the NYMEX had crossed $65 per barrel in early trades yesterday on concerns about the Iran nuclear issue. The commodity is trading almost unchanged in early European trades today.

Tata Motors and Fiat Auto have announced their business cooperation agreement at the ongoing Auto Expo in Delhi. Under the agreement, Tata Motors would manage the marketing and distribution of Fiat cars in India from March of this year. The companies would share the dealer network across the country.

The Tata Motors - Fiat deal may involve production of some of the Fiat passenger car models by Tata Motors at a future date. The companies may also cooperate in development of small cars and Tata Motors may also source diesel engines from Fiat in future.

Both companies had earlier announced that they had formed a joint group to study the possible areas of cooperation.

Tata Motors has raised the prices of its passenger car models by Rs1,500 to Rs11,000 with effect from next week. The company said the price hike is to set off higher input costs.

ICICI Bank has raised its prime lending rate for commercial borrowers by 25 basis points to 11.25 per cent. This is the first rate hike by a bank for commercial lending this year. Rates for retail and home loans have not been increased.

TCS has formalised its joint venture with Pearl group of UK for BPO services. A new company has been formed in the UK in which Pearl would hold a minority stake. This company would take over the existing back office operations of Pearl in the UK along with around 1,000 employees. It would initially offer back office services to Pearl under the 12-year deal signed earlier and would start offering similar services to other insurance companies in future.

TCS would add around 3,500 employees directly in the March quarter while another 4,500 employees are expected to come from acquisitions, taking total employee additions to 8,000. The company also announced a $40 million order from a US-based customer.

Bank of Baroda has set the price band of its follow-on public offer at Rs210 - Rs230, according to news agency reports. The issue is at a discount to the current market price and the bank is planning to raise more than Rs1,500 crore.

Hero Honda is planning to expand capacities at its existing plants to 36 lakh units per annum by August of this year. The company has also announced the setting up of a new 4.5 lakh plant at an investment of Rs250 crore.

Gail India has signed cooperation agreements with 3 major Chinese oil companies, SINOPEC, CNOOC and Beijing Gas Company. The company would cooperate with CNOOC and SINOPEC in oil & gas exploration and production. The deal with Beijing Gas Company is for natural gas businesses.

Mid-Cap Action

Mid-caps managed to hold on to their gains and broke the two day losing run. The CNX Mid-Cap index gained 10 points and closed the day at 4212.

Educomp made a spectacular debut on the exchanges with a 140 per cent gain over its issue price on listing day. Issued at Rs125, the stock opened at Rs155 and closed at its day's high of Rs300.

I-Flex has announced that Citigroup has selected its software solution for Basel II processing for implementation in the US and other locations. Financial details of the deal have not been disclosed.

Strides Arcolab has announced that it has won an order from the Clinton Foundation for supply of AIDS drugs. The size and tenure of the deal was not disclosed but the company said the drugs would be priced at $240 per patient per year.