RIL holds the indices even as broad markets give up early gains

17 January 2006

The day started on a positive note as the markets tried to recover from the losses of the last few sessions. The Sensex went past the 9400 mark by mid-morning and both indices held on to their gains till early afternoon.

Sharp decline across major Asian markets led to a decline in afternoon trades. In today's trade, both the Japanese and South Korean indices lost more than 2 per cent each.

The star of the day was Reliance Industries which opened firm and continued to build momentum throughout the session before closing with a massive 6 per cent gain. Today was the last day for settling outstanding Reliance Industries contracts in the futures segment. The exchanges are holding a special trading session exclusively for Reliance Industries before market hours tomorrow.

The sharp gains in Reliance helped the indices to stay in positive territory, despite losses in other frontline stocks. The Sensex managed to close marginally in the positive while the Nifty slipped into the red by the end of the session.

Steel stocks continued to decline as more and more analysts are turning bearish on the sector. SAIL was the biggest loser among index stocks, closing more than 3 per cent lower. Tata Steel lost over 2 per cent.

Telecom stocks also could not reverse their losing trend today. MTNL lost more than 3 per cent while VSNL closed nearly 3 per cent lower. Bharti gave up over a per cent.

Wipro was the biggest loser among technology stocks, closing 2.5 per cent lower. Infosys also closed lower while TCS added close to a per cent.

Shipping Corp, Dr. Reddy, BPCL and Oriental Bank were the other losers among index stocks.

The rally in Reliance had a positive impact on group stock IPCL which gained over a per cent.

HDFC Bank, M&M and L&T were the other major gainers.

Sensex closed at 9314, a gain of 3 points, and the Nifty at 2829, lower by 4 points. Nifty January futures closed at a discount of 31 points to the spot index.

Reliance Industries, Infosys and Educomp were once again the 3 most active stocks on the NSE in terms of traded value.

US markets ended yesterday without much change from Friday's closing levels. Data released yesterday showed lower than expected inflation in the US for the month of December. Oil stocks gained as crude oil held firm. Most traders are waiting for results from major companies resulting in subdued trading activity.

The Dow closed marginally lower while the NASDAQ closed slightly higher. S&P 500 index ended with gains of one-tenth of a per cent.

February crude oil futures on the NYMEX closed at $53.92 per barrel yesterday. The commodity has gained 1.5 per cent and is closing in on $55 per barrel in early European trades today.

Reliance Industries has issued a public notice ahead of the special trading session tomorrow to determine the post-demerger stock price. The company said 52 per cent of the cost of acquisition of Reliance Industries stock before the de-merger should be apportioned to the de-merged Reliance Industries for taxation purpose of individual shareholders.

In other words if the stock was bought for Rs900, Rs468 should be treated as the cost for de-merged RIL and the balance Rs432 the cost for the other four stocks. 38.7 per cent of the original cost should be apportioned to Reliance Communication Ventures, 7.3 per cent to Reliance Energy Ventures, 1.3 per cent to Reliance Capital Ventures and 0.7 per cent to Reliance Natural Resources, earlier called Global Fuel Management.

News agency reports indicate that the expansion of refining capacity by Reliance Industries is well on schedule and is expected to be completed by 2008. The company is spending close to Rs25,000 crore to double the capacity to 60-million tonnes per annum. After completion, the Jamnagar refinery of Reliance would become the largest single location oil refinery in the world with a refining capacity of 1.2-million barrels per day.

Satyam Computers has denied reports in a British financial newspaper that IBM has held talks with the company for a possible stake acquisition. The report said IBM has approached the promoter of Satyam recently.

Jet Airways has reportedly confirmed that it has indeed initiated talks with Air Sahara for a possible acquisition. The company said the acquisition would depend on the possible value generation for shareholders. Air Sahara had last week denied reports of a sell-off and had clarified that talks are being held only for forming a strategic partnership.

Tata Motors is reportedly looking at supplying CNG buses to Philippines. The company may join an alternate fuel programme initiated by the Philippines government.

Mid-Cap Action

Mid-caps also opened strong and the market breadth was positive till afternoon. Many mid-cap stocks declined in the afternoon and the index gave up all its gains and closed more than a per cent lower. The CNX Mid-Cap index lost 47 points and closed the day at 4141.

Gillette India would remain as a separate entity and would not be merged with Procter and Gamble. Gillette's parent company is being merged with Procter and Gamble as per a deal announced last year. However, Gillette India's operations and distribution would be restructured under P&G.

Federal Bank has reported a net profit of Rs71.64 crore for the December quarter as compared to Rs12.01 crore for the prior year quarter, a nearly five fold increase. Last year figures include an exceptional charge for salary arrears. Total income for the quarter was at Rs410.87 crore as against Rs332.82 crore, an increase of 23.45 per cent.

NDTV may launch an entertainment channel over the next six months besides starting broadcast of regional language news feeds in major cities. The company is also in discussions to sell a strategic stake in its website. This was disclosed by the company management to analysts and reporters.