Oil and technology stocks take indices to new lifetime highs

17 August 2005

Indian markets are moving to a different tune with negative global cues hardly having any impact. A day after the US markets had their worst decline in months on worries of high oil prices affecting consumer sentiment, Indian markets celebrated high oil prices.

The day belonged to ONGC, which was on a roll from opening trades. The stock continued its uptrend throughout the day and closed the day with gains of close to a massive 5 per cent. Some institutional investors and large traders are buying into the stock, as higher oil prices would improve its profitability.

When the stock of the most valuable company in the country rallied, it carried other oil and oil-related stocks with it. Reliance Industries also joined the trend and closed with gains of over 2 per cent.

Technology was the other sector, which saw very good buying interest today. Frontline software stocks led by Infosys gained, adding further momentum to the markets. Infosys closed with gains of close to 3 per cent. TCS gained over 2 per cent, while Satyam and Wirpo also managed to close with gains.

The momentum took the indices to their lifetime highs by afternoon. Nifty crossed the 2400 mark for the first time ever. Both indices closed at new lifetime closing highs.

Sensex closed at 7860, a gain of 91 points, and the Nifty at 2403, a gain of 33 points. Nifty August futures closed the day at a premium of 1 point to the spot index.

ONGC, Bajaj Auto and Infosys Technologies were among the major gainers among Nifty stocks while BHEL, Glaxo and Gujarat Ambuja Cement were the major losers.

US markets had one of the worst sessions in recent months yesterday. Subdued forecast by Wal-Mart led to weakness in most other retail stocks. High fuel prices are expected to dampen consumer spending in the coming quarters. Higher energy prices are also having an impact on consumer price inflation, which rose more than expected.

The Dow and S&P 500 indices closed with losses of well over a per cent each. Good results from HP could not help the NASDAQ, which lost close to one and a half per cent.

Crude futures for September delivery remained steady yesterday, closing the day with marginal losses. The commodity closed at $66.08 on the NYMEX yesterday, down 19 cents from the previous close. Crude was trading marginally below $66 in early European trades today.

Indian ADR's could not survive the decline in US markets yesterday. VSNL was the biggest loser closing over 4 per cent lower. Tata Motors lost over 2 per cent while the banking duo, ICICI Bank and HDFC Bank, also lost over 2 per cent each. Dr Reddy's lost over a per cent each while MTNL closed marginally lower. Among the technology ADR's, Wipro and Satyam lost over a per cent each while Infosys lost over half-a-per cent.

ICICI Bank has acquired apnaloan.com, an online distributor of financial products. The bank would take over the entire operations of the company, which is one of the best-known brands in the retail distribution space. The acquisition would strengthen the bank's retail finance operations. The stock closed marginally lower.

The head of Tata Motors' passenger car division, V Sumantran, has left the company. He was instrumental in making the Indica a success and was intimately involved in the low cost passenger car being developed. The company had promoted the head of its commercial vehicles division as the managing director recently. The stock closed with gains of close to a per cent.

VSNL has signed the agreement with the government of South Africa to become the second telecom operator in the country. VSNL would hold 26 per cent stake in the operations, which would offer voice, data and limited mobility services. VSNL would have management control and operations are expected to start within 9 months. The stock closed flat.

ITC expects to finalise the location of its proposed Rs2,500 crore integrated pulp and paper project within two months. The company is evaluating various locations in the states of Andhra Pradesh, Madhya Pradesh and Gujarat. The new plant would raise the company's capacity to over 5.5-lakh tonnes per annum. The stock gained half-a-per cent.

Engineering and construction major L&T has won a new order for the construction of the new Hyderabad airport. The order is reportedly worth close to Rs500 crore. The stock closed lower by almost a per cent.

Mid-Cap Action

Mid-caps maintained their strength today though gains on the mid-cap index was lower than the frontline indices. The CNX Mid-Cap index closed the day at a new lifetime high of 3659, a gain of 36 points.

Vivimed Labs had a dream debut on the bourses today after its recent IPO. Issued at Rs70 per share, the stock opened at Rs131 on the NSE and saw a high of Rs225. The stock closed at Rs218, a listing gain of over 210 per cent.

Mid-cap software company Visualsoft informed the stock exchanges that it has no information about the promoter of Satyam Computers picking up a large stake in the company. An investment fund has intimated the company about a stake acquisition through open market operations.

It was revealed later in the day that Softbank of Japan has picked up a 14 per cent stake in the company at Rs127 per share from shareholders associated with the promoters.

Visualsoft had gained over 15 per cent yesterday on market rumours about the promoter of Satyam Computers acquiring a large stake in the company. Media reports had also carried the same news today. The stock closed with gains of close to 4 per cent.