Indices fall yet again after strong opening

02 February 2006

The indices opened with healthy gains on strong global cues. The rally in US markets yesterday helped the Asian indices to recover today. The decline in crude prices also helped the sentiment.

The Sensex opened higher and went past the 9,900 mark in early trades. The Nifty also went close to 3,000 levels on strong gains in pharma stocks, as well as a recovery in select other large caps.

After touching the day's highs by mid-morning, both indices saw a sharp decline and touched the lows of the day by early afternoon. Both indices gave up close to a per cent each from yesterday's closing levels as many frontline stocks came under pressure.

From then on, the markets remained range-bound as two attempts at recovery were pushed back from yesterday's closing levels. The indices finally closed with marginal losses.

Cipla was the star of the day after the company announced a board meet next week to consider a bonus issue. The stock maintained its strength throughout the day and closed with gains of nearly 11 per cent.

The surge in Cipla helped pharma stocks Ranbaxy and Sun Pharma as well. Dr Reddy's, too, opened strong but gave up all its gains by early afternoon.

Nalco saw a sharp spurt in afternoon trades and the stock closed more than 7 per cent higher. Hindalco also gained close to 3 per cent.

ACC added nearly 3 per cent on strong shipment figures for the month of January.

BPCL, Bharti, BHEL and Tata Power were the other major gainers among index stocks.

But ONGC lost more than 3 per cent and dragged down the indices considerably. The company management expects the current year's subsidy burden on ONGC to be over Rs12,000 crore, according to reports.

L&T, Tata Tea, HDFC, Maruti and TCS were the other losers among frontline stocks.

The Sensex closed at 9,844, a loss of 15 points, and the Nifty at 2,967, lower by 4 points. Nifty February futures closed at a discount of 6 points to the spot index.

US indices rallied yesterday after two days of indifferent trading. The markets were helped by strong results from Boeing. However, technology stocks were affected by the lower-than-expected results from Google. Oil stocks saw some selling later in the session, which limited the gains for the indices.

The Dow index closed more than four-fifths of a per cent higher, while the S&P 500 and NASDAQ closed with gains of around one-fifth of a per cent each.

Fresh concerns over the Iran nuclear issue saw crude oil surge close to $69 per barrel yesterday. However, higher-than-expected US inventories pulled down prices later in the day. March futures on the NYMEX lost nearly 2 per cent and closed at $66.54 per barrel yesterday. The commodity is trading flat in early European trades today.

Tata Motors has achieved a volume growth of 19.6 per cent in sales for the month of January. The company sold a total of 46,635 units for the month as compared to 39,000 units during January 2005.

Tata Motors sold a total of 20,765 passenger cars and SUVs in the domestic market during January 2006, while the total of commercial vehicles sold during the month was 21,301 units. Exports for the month were pegged at 4,569 units.

Major cement companies have reported good growth in production and shipment figures for the month of January. Companies belonging to the Aditya Birla group (Ultratech and Grasim) posted total shipments of 2.735 million tonnes for January 2006, as compared to 2.39 million tonnes during the same month of the previous year.

ACC's shipments for January were at 1.648 million tonnes as against 1.505 million tonnes for January 2005. Gujarat Ambuja and Ambuja Eastern shipped a total of 1.402 million tonnes as compared to 1.257 million tonnes.

Dr Reddy's has entered into an agreement with pharma research company Argenta Discovery for joint development of drugs for respiratory diseases. The two companies would jointly identify potential molecules and develop them for commercialisation. The costs of development would be shared.

Pharma major Cipla has announced that its board would meet next week to consider a bonus issue as well as an increase in FII investment limit. The board would also consider an equity issue to raise funds for expansion.

The board of Sterlite Industries is also meeting next week to consider a bonus issue and stock split.

Mid-Cap Action

Mid-caps also came under selling pressure in afternoon trades, though they managed to recover before closing. The CNX Mid-Cap index gained 3 points to end the day at 4,272.

Hexaware Technologies has posted a consolidated net profit Rs24.75 crore for the December quarter as compared to Rs21.46 crore for the previous year's quarter. Total revenues increased to Rs182.05 crore from Rs159.84 crore. The company has given a profit guidance of $5.4 million on total revenues of $38.6 million for the quarter ending March 2006.

For the full year 2005, Hexaware has posted a net profit of Rs91.5 crore as compared to Rs 63.74 crore for the year 2004. Total revenues increased from Rs557.53 crore for the year 2004 to Rs693.24 crore.

BK Birla group company Oudh Sugars said its board would meet next week to consider an equity issue.