Recommendation by a government committee to scrap P-Notes, which are used by unregistered foreign investors to enter Indian markets, within a year did not affect market sentiment at all today and the indices continued the uptrend. Firm Asian markets and strong FII inflow figures for the previous month helped the sentiment.

The Sensex opened above 11800 and moved past 11900 by mid-morning. Both indices maintained a steady up trend till late in the afternoon when very selective profit booking was seen.

Sensex closed with gains of 136 points at 11914 and the Nifty gained 42 points to close at 3477. Nifty September futures ended at the same level as the spot index.

Zee Tele continued its recovery from Friday and added another 5 per cent to close at nearly three-month highs.

Dabur was the best performer among index stocks, closing 5.5 per cent higher. HLL added nearly 2 per cent.

Auto stocks were very firm following the announcement of good monthly sales numbers. Tata Motors was the best performer in the sector, adding nearly 4 per cent. Maruti closed more than 3 per cent higher.

Among two-wheeler stocks, TVS Motors rallied more than 12 per cent.

The decline in crude oil prices continued to push up oil marketing stocks. HPCL added another 5 per cent while BPCL ended more than 3 per cent higher.

Index heavies ONGC and Reliance Industries added nearly a per cent each.

Suzlon Energy added more than 3 per cent on an order win. L&T closed nearly 2.5 per cent higher.

Jet Airways recovered more than 3 per cent on announcement of a hike in fuel surcharge.

Glaxo was the other major gainer, closing well over 2 per cent higher.

Dr. Reddy's was the worst performer among index stocks, closing more than 0.5 per cent lower. Ranbaxy and Sun Pharma ended with very marginal losses.

Hero Honda recovered from a 1 per cent fall and closed 0.5 per cent lower. M&M closed with modest losses.

PNB lost over 0.5 per cent and HDFC closed marginally down. Among other losers, SAIL lost 0.2 per cent.

Global markets / crude oil
Most Asian markets rallied further on sustained hopes of better US demand following favourable economic data. Japan led the region with gains of 1.4 per cent while Indonesia was the best performer with gains of nearly 1.75 per cent. Shanghai closed 1.25 per cent higher while Singapore and Thailand gained well over a per cent each.

Malaysia gained more than 0.75 per cent while Hong Kong added over 0.5 per cent.

European markets opened with marginal gains before gaining further. Major indices are trading with gains of between 0.2 per cent and 0.5 per cent each in early afternoon trades.

Crude oil prices opened with modest gains but slipped below $69 towards the end of the day. Near month NYMEX futures is trading at more than 0.5 per cent lower at $68.75 per barrel in European trades today.

Large-cap news flow

• Grasim would hold a 30-per cent stake in a Chinese JV promoted by the Aditya Birla group to acquire the assets of a 30,000-tonnes per annum VSF manufacturer. The cost of acquisition has not been disclosed.
  
  
• The board of ICICI Bank has decided to submit a letter of interest to the RBI for acquiring United Western Bank, which has been placed under moratorium.
  
  
• Canara Bank has also expressed interest in acquiring United Western Bank.
  
  
• The board of HLL would meet later this week to consider the merger of its subsidiary, Modern Foods, with the company. The board would also consider the de-merger of some assets, including tea plantations.
  
  
• Jet Airways would charge an additional Rs100 per ticket as fuel surcharge with effect from tomorrow.
  
  
• Suzlon Energy has received an overseas order for wind energy equipment with an aggregate capacity of 105 MW.
  
  
• The board of Aditya Birla Nuvo would meet later this week to consider a rights issue.

Mid-Cap Action
Mid-caps and small caps did much better than the large caps as they also continued the rally from Friday. Stocks in sectors like textiles, sugar, tea plantation stocks etc continued to see buying interest.

The CNX Mid-Cap index ended with gains of 56 points, or 1.27 per cent, to finish the day at 4408. BSE mid-cap index gained 1.93 per cent and the BSE small cap index added 1.27 per cent.

Essel Propack, Pritish Nandy Communications, Garden Silk, Divis Lab, Softpro, Voltas, Hitech Gear, iGate Global and Saksoft were among the major mid-cap gainers.

BEPL, Crest Animation, Petron Engineering, Quintegra, Indo-Rama Textiles, Sirpur Paper and Consolidated Finvest were among the other major mid-cap losers.

Mid-cap news flow

• Apollo Tyres has decided to cancel the rights-cum-follow on public issue and instead would raise Rs250 crore through the QIP route. The company would also allot convertible warrants to promoters.
  
  
• Gujarat State Petronet has signed a 15-year agreement with Reliance Industries to transport 11 million cubic metres per day of natural gas from Bharuch to Jamnagar.
  
  
• Centurion Bank of Punjab has fixed the merger ratio with Lord Krishna Bank at 7 shares of Re1 each of Centurion for every 5 shares of Rs10 each of Lord Krishna.
  
  
• Centurion Bank would also make a preferential issue of 9.5 crore equity shares to Bank Muscat at a price of Rs24.54 per share to raise Rs233 crore. The bank would also raise Rs184 crore from a preferential issue of 7.5 crore shares to India Advantage Fund at the same price.
  
  
• United Western Bank has been placed under moratorium till 01 December 2006. Restrictions have been imposed on the operations of the bank, including withdrawal of money by depositors.
  
  
• Banks like Federal Bank, Andhra Bank and Allahabad Bank have expressed their interest in acquiring United Western Bank.
  
  
• Hotel Leelaventure would acquire 250 acres of land in Goa to set up a golf course. The company would also enter into contracts for managing hotels in Dubai, Abu Dhabi and Jaipur.
  
  
• Goldiam International has received overseas orders worth Rs92 crore to be executed within 3 months.
  
  
• Sathavahana Ispat would sell 18 to 24 MW of power from its captive powe plant to Power Trading Corp for a period of 5 years.
  
  
• IOL Broadband is planning to raise $50 million from an overseas issue. The company would also consider preferential issue of equity shares to promoters and other investors.
  
  
• Century Textiles has restored normal production at its cement clinkering unit in Chattisgarh after a disruption due to fire.
  
  
• Tantia Construction has received an order worth Rs6.5 crore for construction of bridges.
  
  
• Indo-Tech Transformers has entered into a cooperation agreement with Dupont India. Under the agreement, Dupont would provide some key material and technology for building transformers in return for a share of future revenues.
  
  
• The shareholders of Nahar Spinning and Nahar Exports would meet in October to approve the merger between the companies.
  
  
• Classic Diamonds has opened a retail store in Delhi and would open another in Ludhiana shortly.
  
  
• Cadila Healthcare would market its generic products in Japan.
  
  
• Jain Irrigation would merge 2 entities engaged in the vegetable dehydration business with the company.
  
  
• A subsidiary of Biocon would collaborate with a Swedish company to develop, manufacture and market a new class of drugs which could become alternatives to antibiotics.
  

*Disclaimer: The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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