Sensex celebrates 8000 with a 100-point rally

08 September 2005

The Sensex scaled the keenly awaited 8,000-mark today as frontline stocks continued their rally, helped by the recovery in global markets and the decline in oil prices. A positive opening was on the cards today as the US markets closed with gains for the second day yesterday and oil prices have dropped almost 10 per cent from last week's record highs.

The 8000 level was broken in early trades itself as many of the large stocks opened firm. While many market observers were expecting a decline after touching the psychologically important level, the indices remained firm for the rest of the day on strong institutional support.

After trading within a band till early afternoon, the frontline indices gained strength in the closing hours of trade. Traders covering short positions in the absence of institutional selling was the main reason for the late surge. The indices closed at the day's highs.

Among the large stocks helping the indices were Infosys, ONGC, Reliance Industries, Tata Motors and ICICI Bank. BPCL was the largest gainer among index stocks, closing more than 5 per cent higher.

Sensex closed at 8053, a gain of 106 points, and the Niftygained 26 points closing at 2454. Nifty September futures closed at a discount of 7 points to the spot index.

BPCL, Bajaj Auto and HDFC were the biggest gainers on the Nifty while Wipro, Ranbaxy and Oriental Bank of Commerce were the major losers.

The US markets continued their strong performance yesterday as well as the decline in oil prices is helping stocks across the board. The damages from Hurricane Katrina are expected to be substantial and investors are betting on a halt to interest rate hikes by the Fed to help the economy tide over the difficulties.

After surging well over a per cent each on Tuesday, the frontline US indices closed the day with decent gains yesterday. The Dow closed with gains of well over one-third of a per cent. The NASDAQ and S&P 500 gained one-fifths of a per cent each to close at their highs for almost a month.

Indian ADR's, however, had a very indifferent day yesterday on the US exchanges. Technology ADR's were among the worst performers with Infosys, Satyam and Wipro all losing more than a per cent each. Telecom stocks MTNL and VSNL also closed with losses of 2 and 1 per cent respectively.

ICICI Bank was the biggest loser among all ADR's, closing almost 3 per cent lower. While Tata Motors gained almost a per cent, Dr. Reddy's and HDFC Bank also closed with gains.

Crude prices have been on a downward spiral ever since the IEA and the US government announced releases from reserves to ease supplies. The commodity lost well over 2 per cent yesterday to close at $64.37 to a barrel for the near month futures. Crude futures are inching closer to the $65 mark in early European trades today.

ONGC suffered a setback in its onshore exploration activities as one of the rigs deployed in coastal Andhra Pradesh exploded today. Details of the damage are not known. The stock closed almost a per cent higher.

Meanwhile, ONGC is expected to receive government sanction for its proposed wellhead refinery in Rajasthan. The government has nominated ONGC-MRPL to receive the crude from the Rajasthan fields of Cairn Energy. ONGC has a 30 per cent stake in the field, which has reserves of 2.5-billion barrels of crude. The refinery would have a capacity of 7.5-million tonnes per annum and would involve an investment of close to Rs8,000 crore.

ONGC may also partner Gujarat State Petroleum Corporation to develop the latter's huge gas find in the KG basin. GSPC had made a discovery of 20-trillion cubic feet of natural gas recently. The development of the field is expected to cost Rs1,500 crore and commercial production would start by the end of 2007.

Bharti TeleVentures has teamed up with IBM Global Services to offer managed services to corporate customers in the domestic market. While Bharti would provide the telecom part of the services, IBM would handle the IT infrastructure and technology services. The stock closed one-and-a-half per cent higher.

TCS is planning to build a new development facility in Chennai. Spread over 70 acres, the facility would cost as much as $175 million when completed over the next two years. Chennai is already the largest development base for TCS, employing over 12,000 employees in the city. The stock gained half-a-per cent.

According to media reports, PSU aluminium major Nalco is planning to set up a smelter in the Middle East. The 300,000-tonnes per annum smelter being planned in the UAE would involve an investment of $2.5 billion. The stock closed more than half-a-per cent higher.

The hike in retail prices of petroleum products did not have much impact on auto stocks, even though analysts expect sales to go down in the short term. Tata Motors added more than 3 per cent. Bajaj Auto closed more than 4 per cent higher while M&M gained over 2 per cent. Hero Honda and Maruti closed with marginal losses.

August sales of Ashok Leyland were higher by 17 per cent as compared to the same month of pervious year despite a 40-per cent decline in export sales. For the first five months of the current financial year, the company has achieved a sales growth of 18 per cent despite a slowdown in the commercial vehicles industry as a whole. The stock closed more than a per cent higher.

Mid-Cap Action

Mid-caps also remained strong today though the gains on the mid-cap index were lower then the frontline indices. The CNX Mid-Cap index closed the day at a new lifetime high of 3754, a gain of 28 points or three quarters of a per cent.

Print media company Deccan Chronicle would raise Rs250 crore from an FCCB issue to fund expansion plans. The bonds would have a maturity of five years and would be listed on an overseas stock exchange. The company had announced the acquisition of a retail store chain earlier this week.

Low cost airline operator SpiceJet would raise $20 million from preferential allotment to two overseas institutions. According to a company release, a subsidiary of Singapore based Temasek and a UAE-based private equity firm have agreed to subscribe to the issue. The company is planning to raise further resources from an FCCB issue.

The board of directors of Himatsingka Seide has approved a bonus issue in the ratio of one share for every share held. The board has also approved a stock split in the ratio of two shares of Rs5 each for every Rs10 share. According to a company release, the board also approved plans to raise up to $60 million from an overseas issue.

The board of directors of Jupiter Biosciences also approved an overseas issue. The amount to be raised was not disclosed.