Market Close: Pre Budget rally but!

Indian markets managed to open with decent gap up but did not sustain the momentum on the back of profit booking witnessed across the sectors. But the second half of trade, markets recovered amazingly with amid volatility and ended with handsome gains. Consumer Durables and Banking counters suffered setback on profit taking while Oil&Gas, IT attracted investors. The volatility was largely ahead of expiry of February series derivatives contract and announcement of Union Budget. Selective stocks in agriculture and defence sector witnessed some value buying ahead of expecting more space in upcoming budget. Much awaited bonus issue on R-Power traded well and ended above the issue price. Momentum recovered in the mid session amid volatility and ended with handsome gains. Good amount of short covering was seen in the late trade. Cues from the Asian and European markets were encouraging. Heavyweights in Cement, Software and Power sectors aided the indices, Midcaps and small caps were in pressure, ended in red.

Sensex ended up by 302 points at 17650.57. It was helped up by gains in ACC (818.35,+6 percent), RIL (2551.7,+5 percent), Guj Ambuja (122.55,+5 percent), Rel Energy (1622.7,+4 percent) and Maruti (797.85,+4 percent). Restricting the gains were Bajaj Auto (2202.95,-4 percent), HDFC Bk (1422.7,-4 percent), HLL (215.4,0 percent).

KS Oil was the stock on lime light. KS oil is one of India?s leading manufacturers of mustard/rapeseed oils with a strong position in the refined oils and vanaspati segments and well positioned to capture an opportunity in the fast-growing branded edible oil segment, which is growing at 25-30% p.a. KS Oil has reported that it is expanding its capacity by adding five new plants, of which three will be functional in FY09E and the rest in FY10E. This will significantly spurt its crushing, solvent extraction and refining capabilities by 5 times of FY07 capacity. Higher capacity should lead to 80% CAGR growth in crude mustard oil production which should be the primary driver of sales growth. The story remains in the demands scenario appears to be an attractive investment option. We have call running in delivery delights services and performing well. The stock ended up by 12%.

Ambuja Cements reported that it is expanding its cargo fleet by adding three ships by the next year for an investment of Rs 150 cr for the internal movement of the construction material to tap the growing demand of cement in the country while containing costs. Out of the three ships, two ships will have carrying capacity of 4,000 DWT (deadweight tonnage) and one will be of 2,800 DWT. The ships would primarily cater to cement distribution for the domestic market. At present, the company has a fleet of seven cargo ships for domestic as well as export use. This expansion is meant for domestic distribution. It will be ready for operation by next year. These moves are in line with the company's earlier announced Rs 3500 cr capacity expansion drive. Stock ended up by 5.4%.

Centurion BoP approved merger with HDFC Bank after which the stock traded down. HDFC Bank and Centurion BoP boards have given in principle approval for merger. They have finalized swap ratio of 1 share of HDFC Bank for every 29 shares of Centurion BoP. The combined entity would have a nationwide network of 1,148 branches (the largest amongst private sector banks), a deposit base of around Rs 120000 cr and net advances of around Rs 85,000 cr. The balance sheet size of the combined entity would be over Rs 150000 cr. HDFC Bank & Centurion BoP Merger is positive keeping Long-term view. Stock ended down by 3.6%.

Technically Speaking: Markets traded firm through out the day. Sensex made an intraday high at 17674 and low at 17137. Broader markets underperformed the frontline counters once again and on the volume front it was a modest day. The overall market breadth was positive with gainers outnumbering losers. Sensex remains range bound and in a Flag formation. The range is 16900 -17900. A break out in each of this direction could result in further acceleration in that direction. Volumes remain low and that means disinterest. Markets are in a consolidation phase and looking for direction.