Sensex back above 7800 as pharma and auto stocks surge

11 August 2005

Record oil prices or cautious global markets are having little impact on our markets as they continued to surge ahead today. Markets have more than recovered from the fall on Monday and have gone past last week's closing levels.

The indices opened firm in the morning as buying continued in many frontline stocks. Some amount of profit booking emerged before noon and pulled the indices marginally into the red.

The recovery from then onwards and the upsurge was spectacular helped by gains in frontline stocks like HLL, Tata Motors and ICICI Bank. The Sensex crossed the 7800 mark comfortably and was trading with gains of well above 100 points by late afternoon.
Though selling emerged and pulled the Sensex down from its day's highs in the last half hour, the index managed to close well above 7800.

Among the pharma stocks, Dr. Reddy's, Cipla and Ranbaxy closed the day with gains of over 4 per cent each. Glaxo closed higher by well over 3 per cent.

Auto stocks were led by Tata Motors, which closed over 3 per cent higher. Maruti closed almost a per cent higher. Hero Honda gained over 4 per cent while Bajaj Auto was higher by a per cent.

Sensex closed at 7816, a gain of 86 points, and the Nifty at 2381, a gain of 21 points. Nifty August futures closed the day at a discount of 3 points to the spot index.

Tata Tea, HLL and HDFC were among the major gainers among Nifty stocks while GAIL, Infosys and VSNL were the major losers.

US markets gave up their early strengths and closed weak yesterday. The positive statements by the US Fed about economic growth and inflation led to a rally in the morning, which took the indices almost a per cent higher. Market sentiment turned negative after crude oil surged to yet another record high later in the day.

The Dow and S&P 500 indices closed around one quarter of a per cent lower yesterday. Losses on the NASDAQ were higher at three quarters of a per cent.

Crude oil futures for September delivery surged over 3 per cent to hit an all time high of $65 to a barrel yesterday. The uptrend came after the weekly inventory data of US crude and gasoline stocks showed an unexpected decline. Crude closed the day at $64.9 yesterday, a lifetime closing high for the near month futures.

Crude was trading lower at $64.45 in today's early European trades after recording a new lifetime high of $65.3 in opening trades.

Most Indian ADR's closed firm yesterday on the US exchanges. ICICI Bank and HDFC Bank continued their up trend from the previous day closing higher by 2 per cent each. Tata Motors and VSNL also gained well over 2 per cent each. Among the technology ADR's, Wipro and Satyam managed to close with gains of over a per cent each while Infosys closed marginally lower. Dr. Reddy's closed higher by half a per cent. MTNL was the only significant loser, closing almost 3 per cent lower.

ICICI Bank surged in later afternoon trades on speculation that it would sell its large holdings in Federal Bank and South Indian Bank shortly. ICICI Bank holds a 20 per cent stake in Federal Bank and around 16 per cent in South Indian Bank.

The bank management later confirmed that though they are planning to exit the two smaller banks, no deals are expected to happen in the short term. ICICI is planning to sell the stakes over the next two years. The stock closed over 2 per cent higher.

There are reports that Infosys is planning to develop a new facility at Hyderabad. The company has reportedly booked a 100-acre plot in a new software export zone being developed in the city. The stock closed a per cent lower.

Among other technology stocks, Satyam closed with gains of well over a per cent and Wipro gained over half a per cent. TCS closed almost flat.

The project consultancy division of commercial vehicles manufacturer Ashok Leyland and natural gas major Gail has teamed up to explore opportunities in the CNG and related segments both within the country and abroad.

The joint venture between ONGC and Mittal Steel for oil exploration has reportedly identified 22 countries for pursuing deals. In some of these countries, the partners would operate on an exclusive basis and on a case-to-case basis in others. ONGC closed marginally weak.

Mid-Cap Action

Mid-caps continued their frenzied rally with many stocks gaining between 10 and 20 per cent today. The mid-cap index opened firm and touched 3600 before declining in intra-day trades before noon. The CNX Mid-Cap 100 index surged ahead again and went well past 3600 in later afternoon trades before closing the day at 3598, a gain of 39 points or well over a per cent.

After remaining quiet for a couple of weeks, PSU stock HMT was back in action today gaining over 25 per cent in early trades. There are reports that the central government is considering a fresh revival package for the company. The stock closed with gains of 31 per cent.

According to unconfirmed reports, the government would infuse Rs750 crore to revive HMT. The company may also go in for a tie up with Mitsubishi of Japan for manufacturing tractors. The company's tractor division had turned around last year, which helped the company to report profits after many years of losses.

Strong buying was also seen in ITI Limited, another ailing PSU company which the government is supporting with a revival package. The stock closed with gains of over 5 per cent.

Varun Shipping would buy 3 LPG carriers with capacity of 35,500 cubic metres each. After the acquisition the total number of vessels owned by the company would rise to 19. The stock closed with good gains.