Market Close: Profit booking drags down the market

Though market took off in positive territory in moring trade it couldn't sustained the gains and landed in negative territory. Chinese market tumbled over 8% for the third time in four sessions since the government raised a tax on trading last week with a little effect on Indian bourses. Market is near its all time high and direction is upward biased. It opened firm continuing the same euphoria but profit booking at higher levels led the indices to shed gains with each successive trading hour. Session then were extremely choppy and volatile. Selling pressure witnessed in Auto on back of poor monthly sales numbers. However some interest was seen in Metal and Banking. Inflation has eased to 5.06% and that is really good sign for Banks. IT stocks also ended weak due to stronger rupee. Midcap and Smallcap indices traded flat inline with frontline stocks.

Sensex traded down by 75 points at 14495.77. Weighing on the Sensex were losses in Tata Motors (711.45,-5 percent), Grasim (2439.6499,-3 percent), BHEL (1371.8,-3 percent), Cipla (217.5,-3 percent) and HLL (196.45,-2 percent). Losses were restricted by gains in Hindalco (146.6,+4 percent), SBI (1406.65,+2 percent), ITC (164.75,+2 percent), NTPC (160.1,+1 percent) and HDFC Bk (1165,+1 percent).

Aluminum and copper major Hindalco was the star performer for the day on reports that Sterlite with Alcan is looking to buy Hindalco. The reports that says that Canadian company Alcan may team up with Sterlite for a hostile takeover bid for Hindalco. The A V Birla Group holds only 27% stake in Hindalco. FIIs and institutions holds 20% and 12% respectively. About 10% is in GDRs while the remaining is with retail investors which are a fairly large free-float. To raise money for its Novellis takeover Hindalco had also made a preferential allotment of 14.75 million warrants and shares in April which would take the promoter holding to about 35%. Sterlite has always been trying to increase its market share in India. It plans to become the No.1 aluminum player in the country. In case if Alcan makes a bid for Hindalco it will make it highly unattractive for other players as it will be embroiled in quite a hostile bid unless the Aditya Birla Group is willing to sell.

Auto major Tata Motors was weak on disappointing monthly sales number. Tata Motors reported a total sale of 42,558 vehicles (including exports) for the month of May 2007 a decline of 4% over vehicles sold in May last year. Cumulative sales were at 83044 numbers which grew by 3%. Vehicles sales in the domestic market were impacted in varying degrees between the commercial and passenger vehicles segments due to the high interest rate regime severely affecting retails. The company's sales of commercial vehicles in May 2007 in the domestic market were 20,675 nos., a decline of 6% over 21,903 vehicles sold in May last year. The passenger vehicle business reported total sales of 17, 580 vehicles in the domestic market in May 2007, a decline of 3% over May 2006. The Indica reported sales of 12,002 nos., a decline of 3% over May 2006. The Indigo family registered sales of 2,215 nos., a decline of 22% over May 2006. Cumulative sales of the Indigo family were at 4,847 nos. with a decline of 11%. Cumulative sales of Sumo and Safari were 6,703 nos., an increase of 31%. The company's sales from exports were flat at 4,303 vehicles in May 2007 as compared to 4,339 vehicles in May 2006. The cumulative sales from exports in the current period at 8,340 nos. have recorded a 5% growth over the previous year. The numbers were below the market estimations which hit the stock and closed down by 5%.

Technically Speaking: Ranged session as profit booking seen at the end. Sensex touched intraday high of 14683 and low of 14465. The Advance to decline ratio stood at 1:1. Market is expected to be ranged and choppy.