Markets hold ground at the peak

09 September 2005

Most market observers were predicting a correction after the Sensex scaled the 8000-mark yesterday. Weakness in the US markets yesterday and recovery in crude oil prices were expected to induce some profit booking and pull down the indices.

The markets opened the day with a lot of circumspection as the frontline indices dipped into negative territory soon after. However, the indices soon started to recover as buying emerged in select frontline stocks, especially the banking stocks.

A strong show by most Asian markets led by Japan, which gained well over a per cent today, helped the indices further and by early afternoon they were back in positive territory. Afternoon hours saw some amount of volatility but a last minute surge helped the indices to close with marginal gains.

Sensex closed at 8060, a gain of 7 points, and the Nifty at 2455, a gain of 1 point. Nifty September futures closed at a discount of 7 points to the spot index.

Bank stocks attracted a lot of buying interest and the Bank Nifty index gained over 2 per cent. HDFC Bank, SBI, PNB, ICICI Bank and Oriental Bank of Commerce were the major gainers among bank stocks.

HDFC Bank, SBI and ABB were the biggest gainers on the Nifty while Ranbaxy, BPCL and HDFC were the major losers.

The US markets declined after two days of strong gains on renewed worries about corporate earnings. Poor outlook from a host of companies dependent on consumer spending and a rebound in crude oil prices was enough to pull back the frontline US indices.

Both the Dow and S&P 500 closed with losses of well over a third of a per cent while NASDAQ closed over a quarter per cent lower.

Indian ADR's, had mixed day yesterday on the US exchanges. Tata Motors was the biggest gainer, closing with gains of well over 3 per cent. ICICI Bank recovered from the previous day's fall and closed 2 per cent higher. HDFC Bank closed with marginal gains.

Telecom stocks MTNL and VSNL both closed with losses.
Among the technology ADR's, Infosys had a strong closing with gains of 2 per cent. Wipro and Satyam closed lower. Dr. Reddy's also closed lower.

Crude prices recovered marginally yesterday after sustained decline over the first three days of the week. The commodity added 12 cents to a barrel yesterday to close at $64.49 for the near month futures. Crude futures are trading above the $65-mark in early European trades today.

According to media reports, Reliance Industries is one of the three bidders for a refinery expansion project in Colombia. The Colombian government had called for partners to expand the refinery capacity to 140,000 barrels per day at an estimated investment of over $800 million. The selected partner would have a 51-per cent stake in the project. The stock closed with marginal gains.

There are media reports that Sistema of Russia is in talks with the ADAE group to acquire Reliance Telecom, the GSM operator on the eastern parts of the country. Sistema had an agreement to acquire a majority stake GSM operator Aircel for $450 million, which is now believed to have expired.

Software majors Wipro, Satyam and HCL Technologies would build new development centres in a new IT park being promoted by the Tamil Nadu government at Chennai. Wipro has reportedly acquired 80 acres of land while HCL would take up 50 acres. TCS is also reportedly building a new facility at Chennai at a cost of $175 million. The stock closed higher.

GAIL has started commercial production of crude oil from the Cambay basin in Gujarat. The company holds a 50 per cent stake in the field with the balance being held by GSPC. Though current production is at a miniscule 350 barrels per day, it is expected to go up to 1,500 barrels in future.

GAIL is planning to invest Rs600 crores for exploration activities over the next few years. The company holds interests in as many as 13 domestic exploration blocks. GAIL is also planning to pick up stakes in oil fields in Iran and Myanmar.

Jet Airways would start a daily service between Delhi and London shortly. This follows the new agreement with UK under which carriers of both countries can start additional services. Jet already operates a daily service between Mumbai and London. The stock closed lower.

Bajaj Auto is planning to gradually phase out its bestselling motorcycle model in the entry-level segment, CT 100. The company is planning to re-launch the model under a different brand name with more value. The company would also phase out its step-through motorcycle models. The stock closed a per cent higher.

The board of directors of Ranbaxy has approved a US listing and raising of additional resources of up to $1.5 billion. The company may convert its existing GDR's into ADR's besides issuing fresh equity in the overseas markets. The additional resources would fund the company's acquisition plans. The stock lost close to 3 per cent.

Zee Tele has tied up with an Australian company to make available its bouquet of television channels in Australia and New Zealand. The deal is expected to help Zee reach more than 45,000 homes in these two countries. The stock lost 2 per cent.

HCL Technologies would expand its BPO operations in Northern Ireland by adding another 600 employees within the next one year. After the expansion, HCL would employ close to 3,000 personnel at its UK operations. The stock lost half-a-per cent.

Mid-Cap Action

Mid-caps also managed to maintain their levels today though the usual buying frenzy was missing. Gains on the mid-cap index were higher then the frontline indices. The CNX Mid-Cap index closed the day at a new lifetime high of 3762, a gain of 8 points.

Sasken Communication Technologies, a developer of advanced telecom software, made its debut on the exchanges today. Issued at Rs260 per share, the scrip opened at Rs460 on the NSE and went on to touch a high of Rs624. The stock closed the day at Rs465 for a listing day gain of over 78 per cent.

According to media reports, Opto Circuits is close to acquiring two US companies in the healthcare segment. The two companies reportedly have combined revenues of over $45 million and the acquisitions are expected to cost $75 million.

Opto Circuits also launched a range of products developed in-house. The new medical electronic products would help in continuous patient monitoring and are reportedly cost competitive.

Sterling Biotech has reportedly acquired Narmada Gelatine, part of the Jumbo group. Both companies are leading manufacturers of pharma grade gelatine. Sterling had acquired the gelatine business of Rallis India earlier. The stock gained well over 10 per cent in early trades.