Markets bounce back sharply as Asian indices recover

19 January 2006

The markets started the day on a highly positive note, though even the most bullish traders would not have anticipated the strength of the rally which followed. Recovery in most Asian markets gave the early trigger and both frontline indices sustained the upward momentum throughout the session.

Better than expected results and huge order wins from technology services companies and mega corporate deals in the aviation sector helped the indices to register their best daily gain in over three months. Short covering at higher levels saw sharp surges in some of the stocks in afternoon trades.

Both the Sensex and the Nifty closed with gains of over two per cent each at the highs of the day.

Technology stocks were the stars of the day as the strong results from Wipro yesterday and a huge order win by HCL Technologies today brought back attention to the sector. Wipro was the biggest gainer, closing 8 per cent higher.

Satyam gained over 3.5 per cent while Infosys added nearly 3 per cent. TCS and HCL Technologies closed with gains of around 2 per cent each.

Metal stocks came back with a vengeance and closed with substantial gains. SAIL added over 5 per cent while Hindalco gained close to 4.5 per cent. Nalco gained over 3.5 per cent.
Bharti recovered from the losing trend of the last few sessions on reports of huge subscriber additions for the month of December. The stock added over 4.5 per cent.

Capital goods stocks had a good day, helped by strong results from L&T. BHEL gained nearly 4.5 per cent while L&T closed with gains of close to 4 per cent.

Tata Motors and Reliance Energy were the other major gainers among the large stocks.

HDFC Bank was the biggest loser among index stocks, closing more than 2 per cent lower. BPCL also lost over 2 per cent.
Sensex closed at 9450, a gain of 212 points, and the Nifty at 2871, higher by 62 points. Nifty January futures closed at a premium of 8 points to the spot index.

US indices declined yesterday as well after some of the leading technology and internet companies reported disappointing results. Intel and Yahoo! announced numbers which were lower than expectations and both stocks lost more than 10 per cent each. The decline in oil prices saw the oil stocks coming under pressure.

The Dow and S&P 500 indices ended with losses of over one-third of a per cent each. Losses on the NASDAQ were much higher at one per cent.

After Tuesday's sharp surge, crude prices declined one per cent yesterday. Reports of warmer weather conditions in most parts of the US led to some profit booking by traders. February crude oil futures on the NYMEX closed at $65.73 per barrel yesterday. The commodity is trading higher in early European trades today.

The board of Jet Airways has approved the buy out of Air Sahara for an enterprise value of $500 million. Jet will not take any liability of Air Sahara on its books and would absorb a section of Air Sahara employees on merit basis. The company said the funds for the acquisition would be raised internally and there would be no equity dilution.

The Jet management said it would integrate operations of both airlines under the Jet brand and would discontinue Air Sahara as a brand. The transfer of flying rights in both domestic and international routes currently held by Air Sahara to Jet is subject to regulatory approval.

HCL Technologies has announced that it has won a multi-year outsourcing deal from DSG International, a retailer of electrical and electronic in Europe. HCL said the deal is the largest ever won by an Indian IT services company, bigger than the ABN Amro deal won recently by TCS and Infosys.

ONGC has announced that it has entered into an agreement with global oil major Shell for cooperation in all areas of the oil and gas business. The 2 companies would jointly bid for oil and gas assets in India and abroad besides looking at possible joint ventures in refining and petrochemicals.

December quarter profits of L&T almost doubled, helped by an extraordinary income of Rs25 crore received from the sale of one of its units. Profits for the quarter were at Rs259 crore as compared to Rs132 crore for the prior year quarter. Total revenues for the quarter increased to Rs3,778 crore from Rs3,314 crore.

Larsen & Toubro said it received new orders worth nearly Rs7,400 crore during the December quarter. Value of orders received during the year so far stands at Rs16,200 crore while the total order book as of now is in excess of Rs25,000 crore.

Mid-Cap Action

Mid-caps also recovered sharply from the losses of the last few sessions and surged ahead. Good buying was seen in many stocks as the market breadth turned very positive. The CNX Mid-Cap index gained 72 points and closed the day at 4185.

Deccan Chronicle would launch a Bangalore edition of the English language newspaper. This would be the third edition after Hyderabad and Chennai. The board of Deccan Chronicle has cleared the setting up of printing facilities in Bangalore at a cost of Rs25 crore, ahead of the launch of new edition.

Nicholas Piramal has reported a net profit of Rs23.74 crore on revenues of Rs357.3 crore for the December quarter. The company had reported a net of Rs78 crore on revenues of Rs347.3 crore during the prior year quarter.

Orchid Chemicals has reported a sharp rise in profits to Rs29 crore for the December quarter from Rs5.76 crore during the prior year quarter. Revenues for the quarter were at Rs238 crore as compared to Rs173 crore.