Indices close with modest losses as Asian markets turn weak

08 February 2006

Despite weakness across Asia, Indian indices managed to recover from early weakness and close with only modest losses. The Sensex opened marginally higher before declining in early trades.

Asian markets saw a sell-off today following the weak trend in US. The Japanese index lost more than 2.5 per cent while South Korea and Indonesia lost over 1.5 per cent each. Hong Kong and Singapore indices lost around a per cent each.

By mid-morning, the Sensex had lost more than 100 points and was trading below 10000. A recovery took the index back above that level only to see another decline in early afternoon trades.

Just when it seemed the Indian indices were following other Asian markets, they staged a smart bounce back in afternoon trades. By the last half hour, both indices were trading very close to the previous closing levels. Another bout of selling in the closing minutes led to a decline.

Steel stocks once again disappointed after showing signs of a come back during the last 2 sessions. Tata Steel closed the day with losses of more than 4 per cent. SAIL lost more than 2.5 per cent. Sesa Goa, a leading iron ore exporter, lost more than 5 per cent.

L&T finally came under some profit booking after the spectacular rally in recent weeks. The stock closed more than 3 per cent lower.

BPCL, Wipro, MTNL, Dr. Reddy and Gail all lost more than 2 per cent each.

Pharma stock Cipla saw a sharp surge in mid-morning trades and held on to the gains for the rest of the day. The stock finally closed with gains of close to 8 per cent. The company had proposed a bonus issue recently.

Prospects of higher tea prices continued to prop up Tata Tea which closed more than 2.5 per cent higher.

Auto stocks generally had a good day as crude oil prices have declined. Maruti, Hero Honda and Bajaj Auto all closed with gains of more than a per cent each.

Among the technology stocks, Infosys and HCL Technologies closed more than a per cent each higher. There is market speculation that HCL is close to announcing a major outsourcing deal.

Nalco, Dabur and Reliance Energy were the other losers among index stocks.

Sensex closed at 10045, a loss of 37 points, and the Nifty at 3009, lower by 11 points. Nifty February futures closed at a discount of 15 points to the spot index.

The US markets declined further yesterday after oil stocks came under pressure. The sharp drop in crude oil prices led to a sell-off in major oil stocks which have high weights on the major indices. Google declined by nearly 5 per cent yesterday affecting sentiment on the NASDAQ.

The Dow lost close to 0.5 per cent and S&P 500 index closed with losses of over four-fifths of a per cent. NASDAQ closed lower by almost three-fifths of a per cent.

Crude prices saw of the worst declines in recent months yesterday. Expectations of higher US stocks led to unloading by large traders and funds. Statements by Saudi Arabian officials that they would look at raising output by more than 15 per cent over the next few years also helped cool down prices. March futures on the NYMEX closed at $63.09 per barrel, lower by $2.02, yesterday. The commodity is trading with marginal gains in early European trades today.

Reliance Industries has announced that it has transferred the control and management of the four de-merged companies to ADAG. The company's nominees on the boards of all four companies have resigned and the boards have been reconstituted.

Unconfirmed reports indicate that Ranbaxy has submitted a bid of Rs2,800 crore for German generic drug company Betapharm. It was reported earlier that Dr Reddy's have submitted a bid of €450 million for the company. News wires reported today that Dr Reddy's has confirmed its bid without specifying the amount.

Reports indicate that ICICI Bank may hike interest rates on home loans and vehicle loans before the end of the financial year.

Gail India has appointed a Belgian consultant for preparing the detailed feasibility study for the proposed gas pipeline between India and Myanmar. The pipeline would pass through the north eastern states of the country and would also transport gas from possible finds in these states.

Siemens India would acquire a 50-per cent stake in gear manufacturer Flender India, which has manufacturing operations in Bengal. The balance 50 per cent is held by Siemens AG of Germany following the acquisition of German company Flender AG.

Mid-Cap Action

After declining in early trades, mid-caps recovered considerably in the afternoon and the index managed to close with marginal gains. Select stocks surged on heavy buying though market breadth was negative. The CNX Mid-Cap index gained 2 points to end the day at 4371.

South Indian Bank has fixed the price band for the follow-on public issue at Rs60-Rs66. The issue opens on 10 February.

Engineering company Thermax has announced that it has won a new order from a cement company for setting up power plants. The order for co-generation plants with total capacity of 37mw is worth Rs119 crore.

Stock broking company India Infoline said it's wholly owned subsidiary has received the license from SEBI to offer merchant banking services. The company has also announced a preferential allotment of equity to the promoters.