PSU stocks' day out

The Sensex finally ended in the green after suffering from a high degree of volatility right from the word go. It was in the red for a significant portion of the day’s session. PSU stocks advanced in late afternoon session of trade, buoyed by optimistic statements from the Finance Minister.

The 30-shares BSE Sensex rose a marginal 8.96 points, to an all-time closing high for the Sensex at 14,652.09. In early-trade, the Sensex struck a new all-time high of 14,697.69, surpassing its earlier all-time high of 14,663.26 attained only on Wednesday (7 February 2007).

After striking an all-time high on the back of a firm opening, the Sensex had slipped into the red partly tracking weak Asian markets, and partly on profit-taking after a solid surge of late. This continued till the benchmark index touched a low of 14,523.16, only to rebound sharply due to bottom-fishing.

The S&P CNX Nifty lost a negligible 0.85 points, to 4,223.40. It had surged to an all-time high of 4,245.30, in early-trade. The Nifty began the trading session in positive territory, but could not withstand the higher levels. It drifted into negative territory in early trade. Technically, the next resistance for Nifty is 4,250, on surpassing which the next target is 4,300 and 4,335. On the downside there is support in the 4,180 - 4,160 range. As long as the index closes above 4,160, the bias remains positive.

The market-breadth was sharply negative after being positive in the opening session, as heavy selling emerged for small-cap and mid-cap stocks. There were over 1.5 losers for every gainer on the BSE. For 1,613 shares declining on BSE, 1043 advanced. Just 59 shares were unchanged.

The BSE Mid-Cap Index ended at 6,173.55, down 13.31 points (0.22%), while the BSE Small-Cap Index settled 46.74 points (0.61%) lower, at 7,651.07.

The BSE clocked a turnover of Rs 4466 crore.

Among the 30-Sensex pack, 17 advanced while the rest declined.

Hindalco Industries was the top loser, down 3.68% to Rs 175.20, on a high volume of 13.97 lakh shares. The stock had slipped from a high of Rs 184.

Bajaj Auto slipped 2.61% to Rs 3000, on profit-taking, after Wednesday’s near 10% surge. The stock had advanced to touch a high of Rs 3100.10 in intra-day trade.

Global consulting and IT major Satyam Computer Services was down 1.10% to Rs 485. It had announced plans to launch its largest Global Delivery Campus outside India in Nanjing, a city in eastern China. The IT bigwig said it was keen to ramp up operations in China through strategic acquisitions. "We as a company firmly believe in strategic acquisitions and 97% of the people working (with Satyam) in China today are Chinese. The company will strengthen its operations in the country through strategic acquisitions," a company statement read.

Bharti Airtel (down 1.10% to Rs 765.25), HLL (down 1.41% to Rs 204.55), and Wipro (down 0.95% to Rs 635) were the other losers.

Reliance Energy was the top gainer, up 1.66% to Rs 568.05, extending a recent surge. Recently, Reliance Energy (REL) won an engineering, procurement and construction (EPC) contract worth Rs 3,800 crore for a 1,200 Megawatt (Mw) coal-fired power plant at Yamuna Nagar, Haryana.

ICICI Bank advanced 1.40% to Rs 996, after striking an all-time high of Rs 1003.90. The stock rose for the second day in a row after the nation's largest private sector bank on Tuesday said it had raised the reference rate by 1% for corporate loans and home loans, from 9 February 2007. On Wednesday, ICICI Bank's ADR gained 2.4% to $46.13.

Maruti Udyog bounced back smartly from a low of Rs 944, to finish 1.47% higher at Rs 965 on 2.14 lakh shares.

Reliance Communications rose 0.98% to Rs 490.50, on a volume of 17.86 lakh shares. It had slipped to a low of Rs 474. As per a newspaper report, Hutchison Telecommunications International had asked bidders for Indian mobile firm, Hutchisson Essar, to submit their offers by Friday (9 February 2007). Reliance Communications is in the fray to acquire Hutchisson Essar. Britain's Vodafone Group and the Hinduja group are also in the race for Hutch.

PSU engineering major, Bhel, rose 0.65% to Rs 2509, on a volume of 2.15 lakh shares. The stock had surged to a high of Rs 2572, in intra-day trade. As per reports, Bharat Heavy Electricals (BHEL) secured a contract worth Rs 400 crore for setting up a 520 Mw (4x130 MW) Hydro Electric Project in Himachal Pradesh. The order for Parbati Hydro Electric Project, Stage-III, was placed by National Hydroelectric Power Corp (NHPC).

Index heavyweight Reliance Industries (RIL) was up 0.11% to Rs 1395.90, after striking a low of Rs 1384.

Another heavyweight, Infosys, gained 0.37% to Rs 2367.50. On Wednesday, Infosys' ADR surged 3% to $60.55.

Global Broadcast News settled at a sharp premium, at Rs 510.10, on BSE. The scrip posted high volumes of 1.30 crore shares on the premier exchange. The company had issued shares at Rs 250 a piece in the recently concluded IPO. The stock surged to a high of Rs 524, while its low was at Rs 381.25. As per market sources, a lot of FIIs and institutions, who could not get any allotment, were buying heavily in the counter.

In the late-afternoon session, the Union Government approved initial public offers in three state-run power firms. The three PSUs which will be able to launch their IPOs are Rural Electrification Corp., Power Grid Corp., and National Hydroelectric Power Corp. India, on Thursday, approved a public offer of shares in Bharat Earth Movers, Finance Minister (FM) P Chidambaram revealed. This triggered a rally for a host of PSU stocks.

Select PSU stocks surged following this statement from the FM. The BSE PSU index was up 0.31%. The Shipping Corporation of India (SCI) jumped 15.75% to Rs 207.40 on a volume of 10.44 lakh shares, and was the star performer among the PSU pack.

RCF (up 9.31% to Rs 48.15), Vijaya Bank (up 5.53% to Rs 52.50), Neyveli Lignite (up 5.15% to Rs 63.25), BEML (up 2.80% to Rs 1218), HPCL (up 1.80% to Rs 297), HMT (up 1.20% to Rs 81.10) and IDBI (up 0.57% to Rs 106.50), ONGC (up 0.15% to Rs 893), and GAIL (up 0.93% to Rs 292.75) advanced.

Shares from the metal sector saw renewed selling following weak global metal prices. The BSE Metal Index was down 1.6% to close at 9,275.10, and was the biggest loser among sectoral indices. Jindal Steel (down 3% to Rs 2505.50), Sterlite Industries (down 2.24% to Rs 478), JSW Steel (down 2.10% to Rs 455.30), SAIL (down 1.60% to Rs 114.35), Maharashtra Seamless (down 0.71% to Rs 525), and Jindal Stainless (down 0.88% to Rs 123.50) ended in the red.

HOV Services, a BPO, jumped 5% to Rs 301, after one of the world’s largest telecom organisations decided to use its transaction management software. Under the terms of the pact, the telecom giant will use OASIS, the software mentioned, to manage and audit accounts receivables assigned to collection agencies and attorneys servicing bad debt throughout the US.

OASIS provides end-to-end transaction management and includes sophisticated modules to strategically distribute accounts to internal departments, or to vendors. OASIS also includes tools to work, manage, audit and dynamically analyze inventory.

Punjab Tractors (PTL) is on a roll following reports of a greater number of companies entering the fray for private equity firm Actis’ 29% stake in the north-India based tractor firm. The stock jumped 11.30% to Rs 343 on 4.88 lakh shares on BSE. A newspaper report said, Escorts was interested in buying stake in Punjab Tractors (PTL). Reports add that the stake sale is likely to be around Rs 400 per share. PTL stock had spurted 8.7% to Rs 308.20 on Wednesday (7 February 2007) to Rs 308.20, boosted by reports that Mahindra & Mahindra (M&M) had already put in a non-binding bid for Punjab Tractors.

Sasken Communication Technologies lost 1% to Rs 543, after hitting a high of Rs 577. The company announced that it expects net profit to rise 50 - 60% in 2007-08 due to cost-reduction. Operating profit margins will improve 2%, to reach 24% of revenue. The communication services firm expected a loss of about $5-6 million from its product business in 2006/07 and hoped to break-even the next year.

KEI Industries surged 4.62% to Rs 106.50, after the company purchased approximately five acres for expanding the cables facility at Bhiwadi, Rajasthan. KEI Industries bought approximately five acres at its existing LT / HT cable making unit for capacity expansion, as also to upgrade HT power cable manufacture up to 132 KV (up from 66 KV at the existing plant) by installing balancing equipments.

The cost of the expansion project is estimated at around Rs 30-35 crore including the cost of land, plant and machinery. The revenue expectations from the project are approximately around Rs 150 - Rs 200 crore. The project is expected to commence operations within the next 7 - 8 months.

Deccan Cements rose 2.73% to Rs 175, after the company approved setting up a 1 million-tonne cement plant along with a captive power plant. The mini-cement plant enjoys lower excise duty than large plants. While large plants are levied duties at Rs 400 per tonne, mini-cement plants are levied excise duties at Rs 250 per tonne.

Hindustan Zinc rose 0.13% to Rs 670, after slipping to a low of Rs 635.20. The company said on Thursday it had cut zinc prices by 8.3% with immediate effect to Rs 1,59,100 a tonne, its second reduction in February.

The Nikkei average closed flat on Thursday, as investors sold Nippon Yusen KK and other shipping firms after their earnings reports, offsetting gains led by high-tech shares. The Nikkei closed up 0.16 points, at 17,292.48. The broader TOPIX index lost 0.47% to 1,720.18. The market will be closed on 12 February 2007 for a national holiday.

US technology stocks rose on Wednesday, as Cisco Systems' profit and outlook reinforced optimism over earnings, while blue-chips ended little changed after a slump in oil prices weighed on energy plays.

The Dow Jones industrial average inched up just 0.56 points, to end at 12,666.87, after touching an intraday record of 12,700.28. The Standard & Poor's 500 Index gained 2.02 points, or 0.14%, to finish at 1,450.02, just shy of its six-year high at 1,452.99 reached earlier in the day, while the Nasdaq Composite Index climbed 19.01 points, or 0.77%, to close at 2,490.50.

Crude oil fell after failing to break above $60 a barrel in New York for a third-straight day and as a government report showed ample US fuel stockpiles. Crude oil for March delivery fell $1.17, or 2%, to close at $57.71 a barrel on the New York Mercantile Exchange. Futures are 8.5% lower than a year ago. Brent crude oil for March settlement fell $1.19, or 2%, to close at $57.23 a barrel on the London-based ICE Futures exchange.

As per provisional data, FIIs were net buyers to the tune of Rs 543 crore on 7 February, when the Sensex surged 165 points.