Market wins

High volatility characterized today’s recovery on the bourses after a correction, which had shaved 114 points off the BSE Sensex, in the past two days. A newspaper report about billionaire investor George Soros visiting India for the first time on 15 December 2006, boosted market sentiment. Soros is to announce investments that will signal his long-term bet on a few sectors, the report suggests.

The market also shrugged off concerns over the fate of Indo-US relations after Democrats got control of the House of Representatives from President George W Bush's Republican Party in the Congressional elections. Reports suggest that despite the Democrats’ victory, the Indo-US nuclear bill may still see the light of day. A key Democratic senator on Wednesday said he was ready to have the US Senate act quickly to approve the landmark deal. The Sensex had lost 84 points in volatile trade on Wednesday following the Democrats’ victory in mid-term polls.

The market ended with modest gains today after a highly volatile trading session. The barometer index rose 64.98 points (0.5%), to settle at 13,137.49. The S&P CNX Nifty added 19.10 points (0.5%), to settle at 3,796.40.

The Sensex had surged over 100 points in opening trade, but shortly slipped into the red. It managed to recover almost instantly. In afternoon trade, the benchmark index gained over 100 points for the day atleast two times before paring gains after the surge. Between some of the vital intra-day bottoms and tops, the Sensex swung about 430 points. Between the day’s low of 13,069.85 and a high of 13,192.89, it fluctuated 123.04 points.

The market-breadth was strong. Against 1,473 shares rising on BSE, 1,033 declined. As many as 88 shares were unchanged. Gainers outpaced losers by a ratio of 1.4:1. Select small-cap and mid-cap shares surged. There has been a surge in small-cap and mid-cap stocks on a selective basis since the past few days. Market men say that small-cap and mid-cap stocks are catching up with the surge in blue-chips since the past few days.

The BSE clocked a turnover of Rs 4,088 crore compared to Wednesday's Rs 4,340 crore.

The market has been witnessing an uptrend since late-July 2006. Recently, strong Q2 results and a hefty FII-inflow aided the surge. The Sensex is up almost 40% in calendar 2006, so far.

FII-inflow in calendar 2006 has reached $7.14 billion. The inflows are strong, coming on the top of record annual inflow of $ 10.7 billion in 2005. The inflow totaled $6.59 billion 2003 and $8.5 billion in 2004.

The fund-flows into India are due to strong earnings growth of India Inc coupled with increasing recognition of India’s long-term growth prospects. India’s growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation. Prime Minister Mahmohan Singh has promised a complete policy on infrastructure, including regulatory and institutional framework, to make it attractive for private participation in the near future.

Continued inflows from FIIs are notwithstanding apprehensions regarding stretched valuations of Indian equities.

In today’s trade, car major Maruti Udyog (MUL) lost nearly 3% to Rs 909.80. However, the stock came off the lower level after plunging as much as 3.7%, to a low of Rs 902 following reports that Nissan Motor Company has terminated talks with Japanese compact car maker Suzuki Motor Corp, for a project in which Suzuki was to build a Nissan model in India for sale in the local market. It may be recalled that following a recent tie-up between the two, MUL was to make cars in India at Manesar, in collaboration with Nissan Motor Company.

Hindalco Industries lost 3% to Rs 182.20, after the RBI said that foreign investors will not be allowed to buy shares in the firm without its permission, as foreign investment had touched the 22% limit.

Satyam Computer rose 3% to Rs 428, on reports that it has won a $71 million order for 7 years, from Australia's top airline Qantas Airways.

ICICI Bank gained 1.4% to Rs 794.90. The stock hit an all-time high of Rs 804 in late-trading. A block deal of 10 lakh shares was executed in ICICI Bank on BSE in the FII-segment, at Rs 801 per share. ICICI Bank expects interest rates to remain steady.

HDFC Bank gained 1.4% to Rs 1,017.

Tata Steel rose 2% to Rs 504. As per reports some of the major shareholders of Corus Group have sold their shares in the company, raising doubts about a counter offensive to Tata Steel’s $8 billion bid for the Anglo-Dutch steel maker.

Software major Infosys rose 0.8% to Rs 2,144. The scrip gained for the third day in a row today, after shareholders approved a sponsored ADR issue, on Tuesday.

Index heavyweight Reliance Industries (RIL) advanced 0.6% to Rs 1,260.

Recently listed Development Credit Bank jumped 5% to Rs 51.10. The stock rose on a heavy volume of 67.7 lakh shares on BSE.

Mahindra & Mahindra gained 6.6% to Rs 832 after Renault said on Thursday it was expanding its existing joint venture with Mahindra & Mahindra to manufacture more models for the Indian market.

Indo Tech Transformers jumped nearly 14% to Rs 218.55, after the company fixed a board meeting on 20 November 2006, to consider the recommendations of the project monitoring committee to review the progress of various projects and consider the modification/enhancement of capacity at the large power transformer plant near Kancheepuram.

Petron Engineering Construction gained 5% to Rs 177.10. On Thursday, it garnered a contract worth Rs 50 crore from Grasim Industries for civil and mechanical work on the refractories at Grasim's cement project in Rajasthan.

Glenmark Pharma jumped nearly 6% to Rs 460. The stock has risen 54.6% in a short while from Rs 297.35 on 5 October 2006.

Financial Technologies jumped 7% to Rs 1,924.85. As per reports, the company plans to raise $200 million through equity, or other instruments, to fund its expansion. In October, the company's board had approved raising $500 million in tranches.

Infrastructure Development Finance Company gained nearly 5% to Rs 79.05. Bank of India and Union Bank of India have joined hands with Infrastructure Development Finance Company for loan syndication. The alliance expects to handle 16 projects worth Rs 11,500 crore over the next five months and 60 proposals worth Rs 45,000 crore over the following 12 months.