Sensex finishes flat despite volatility

The BSE Sensex finished the week on a flat note, amid intense volatility, as value buying emerged for the battered index pivotals, after a sharp fall from all-time highs. A host of factors including lack of inflows at higher levels, the surprise CRR-hike, high valuations, rising inflation and rising interest rates and fears of an earnings slowdown in the coming quarters kept the sentiment edgy all along.

The defeat of the Congress in Uttarakhand and Punjab, weak global markets and profit-taking at higher levels have also plagued the market lately. Caution was also partly due to worries of a possible interest rate hike by the Bank of Japan (BoJ), which came true later. Japan's central bank raised the benchmark lending rates in the country to 0.50%, on 22 February 2007.

The BSE Sensex settled with a marginal loss of 1.13 points, at 12,884.99, while the S&P CNX Nifty settled at 3,718, a loss of 8.75 points.

On 5 March 2007, the BSE Sensex plunged 471.09 points, to 12,415.04 as heavy selling continued for the entire day, following a global market meltdown. Experts opine that one of the reasons for the current sharp correction is due to Yen carry-trade unwinding.

The Sensex jumped 282.05 points, to settle at 12,697.09, on 6 March 2007, tracking a recovery across Asian markets. The short-covering in derivatives also played a part in today's remarkable upsurge. IT, telecom shares and leading banks also edged higher.

However, a correction again set in with the Sensex declining 117.34 points, to 12,579.75, after the government said it will consider banning cement exports if such a move could help bring down prices.

The Sensex jumped 469.60 points, to settle above the 13,000 mark, at 13,049.35, following strong rally in Asian markets. There was strong buying demand for battered blue-chips as well as a host of small-cap and mid-cap shares.

The 30-share BSE Sensex lost 164.36 points, to 12,884.99, as the mood was dampened by rising inflation figures, and was not able to sustain the higher levels, succumbing to sales.

Reliance Industries (RIL), advanced 0.32% to Rs 1318.50. There were reports that RIL will transfer its overseas oil assets to a new holding company, to reduce risk on its balance sheet as many of these are located in politically risk-prone areas. RIL has also scheduled a board meet on 10 March 2007, to consider the amalgamation of Indian Petrochemicals Corporation (IPCL), with itself.

IPCL gained 4.70% to Rs 268.60, on speculation that the merger ratio or swap ratio will be in favour of IPCL shareholders. Marketmen expected this ratio to be 4:1 (4 shares of IPCL for every share of RIL).

Tata Steel lost 2.10% to Rs 433.80. Shareholders of the Corus Group have agreed to Tata Steel’s $12 billion takeover of the European steelmaker. Also NatSteel Asia, a wholly-owned subsidiary of the company, entered into an agreement to acquire two rolling mills in Vietnam. The transactions are likely to be completed by June 2007.

Wipro lost 0.71% to Rs 564.60, amid reports that the company was close to another US acquisition. According to reports, it will be acquiring a US-based aerospace services company. The buyout, expected to be around $90 million, will help Wipro strengthen its aerospace capability. Other areas where Wipro is looking at acquisitions are manufacturing, travel and transport, infrastructure and BPO.

ACC tanked 8.85% to Rs 780.85, after its February shipments fell 7.2% to 1.42 million tonnes year-on-year. The production in February 2007 declined to 1.45 million tonnes, down from 1.54 million tonnes in February 2006. Production was hurt due to technical modifications at three of its plants.

Meanwhile, India Cements, down 9% to Rs 153.25, and Shree Cements, down 13.5% to Rs 1026.90, slipped after cement companies agreed to hold prices of the key building material for a year.

ICICI Bank gained 1.75% to Rs 859.55, after it decided to consider transfer of investments in four subsidiaries in insurance and mutual fund businesses to a wholly-owned subsidiary, which also may lead to the eventual listing of the holding company. ICICI Bank’s investments in the four subsidiaries may be transferred to ICICI Holdings, the new subsidiary to be formed.

Ranbaxy Laboratories rose 4% to Rs 326.05, after the company's subsidiary, Terapia, in Romania, reported 50% growth in sales for 2006. Ranbaxy also informed that Terapia had won approval for 20 new products, which it plans to launch soon.

Engineering and construction major, L&T, moved higher by 1.64% to Rs 1481.70, on reports that the company was in talks with Japan's Toshiba Corporation for a joint venture for power plants and equipments in India. As per the deal, L&T will hold majority stake in the joint venture. The company will invest about $ 173 million to build plants for steam turbines and power generators. The joint venture aims to have an annual turnover of 20 billion yen in five years.

FMCG giant Hindustan Lever rose 2.94% to Rs 183.55, after influential brokerage in a report put 'buy' on the stock with a 12-month price target of Rs 240, citing attractive valuation after the steep correction in the counter of late.

NTPC dropped 6.10% to Rs 139.75. The board of NTPC approved a proposal for the company's foray into nuclear power generation. NTPC is planning to float a subsidiary for its international operations. The company plans to make a global foray by building a 700 Mw gas-based power plant in Nigeria and 500 Mw thermal plant in Sri Lanka. NTPC is likely to sign an agreement with the Nigerian government for the $ 700 million project within a month.

Suzlon Energy was down 3.23% to Rs 1015.05, after its target company, Germany's REpower, reported a turnaround in 2006 on Tuesday. REpower reported a profit for 2006, as a restructuring programme took effect. REpower's earnings before interest and tax (EBIT) were 12.2 million euros ($16 million) in 2006, up from a loss of 4.3 million euros the year before. Net profit rose to 7.1 million euros from a loss of 6.8 million euros in 2005.

R Systems International tumbled 30.62% to Rs 122.70, after the company reported a dismal financial performance for the fourth quarter ended 31 December 2006. On a consolidated basis, R Systems reported a loss of Rs 6.56 crore for Q4 December 2006 compared to a net profit of Rs 3.18 crore in Q4 December 2005. Consolidated sales for the December 2006 quarter rose 32.5% to Rs 56.02 crore (Rs 42.27 crore).

On 7 March 2007, MindTree Consulting settled at Rs 620.30 on BSE, a sharp premium of 45.88% over the IPO price of Rs 425. The stock debuted at Rs 599. It also hit a low of Rs 575.20 and a high of Rs 678.80.

Aditya Birla group's Idea Cellular settled at a slight premium, at Rs 85.55, on Friday ( 9 March 2007). The stock made its debut on the Bombay Stock Exchange (BSE) and listed at Rs 90, against the IPO price of Rs 75. The stock also hit a high of Rs 94.25, and a low of Rs 84.

India's wholesale price index rose 6.10% in the 12 months to 24 February 2007, little changed from the previous week's annual increase of 6.05%, data released on 9 March 2007 showed. Analysts were expecting this figure to be at 6.03%. Annual inflation for the week ended 30 December 2006 was revised to 5.89% from 5.58%. It stood at 4.18% in the corresponding week a year ago.

In a major development, Morgan Stanley, Citigroup and private equity fund Actis, have entered into agreements to buy 6% stake in the National Stock Exchange (NSE) for undisclosed sums, the exchange informed. The deals will take foreign ownership of NSE to 26%, the maximum allowed by Indian law, after NYSE Group Inc, Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund paid $460 million for stakes totaling 20% in January 2007.

Morgan Stanley will buy 3%, while Citigroup will take 2% and Actis 1%, NSE said in a statement.