Rally fizzles out in late trade; PSU banks slide

Stocks ended volatile session slightly higher extending gains for the second straight day. Strong global cues triggered a solid rally in first half of the day’s trading session. However profit booking at higher levels in second half capped gains. Volatility was high towards later part of the day.

As per provisional data released by BSE after trading hours, foreign funds today, 6 August 2008, bought shares worth a net Rs 1815.74 crore. Domestic funds sold shares worth a net Rs 804.36 crore.

Shares of state-run banks slipped. The market breadth turned negative in late trade in contrast to a strong breadth earlier in the day. BSE turnover crossed Rs 7,000 crore mark.

The US Federal Reserve at a meeting held after Indian market hours yesterday, 5 August 2008, held key interest rate at 2%. The Federal Open Market Committee said that inflation has been high but insisted that price rises will eventually moderate. Though it expressed concerns about economic growth and inflation, it indicated it is in no rush to push borrowing costs higher.

The BSE 30-share Sensex rose 112.47 points or 0.75% to 15,073.54 after oscillating in a band of 387.22 points. At the day’s low of 15,035.60 touched in late trade, the Sensex gained 74.53 points. The market opened with an upward gap of 302.58 points at 15,263.65 and surged further to strike an intra-day high of 15,422.82 in early trade. At the day’s high, the Sensex advanced 461.75 points.

The BSE Sensex is down 5,213.45 points or 25.69% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6,133.23 points or 28.92% away from its all-time high of 21,206.77 struck on 10 January 2008.

The S&P CNX Nifty rose 14.70 points or 0.33% to 4,517.55. Nifty August 2008 futures were at 4518.90, a slight premium of 1.35 points as compared to spot closing.

The market opened with an upward gap boosted by the Fed decision. A further slump in crude oil prices also boosted the sentiment. The BSE Sensex surged past the 15,000 mark in opening trade.

The market breadth, which was strong throughout the day, turned negative in late trade. On BSE, 1466 shares declined as compared to 1245 that rose. 78 remained unchanged.

The BSE Mid-Cap index was up 0.20% to 5,855.42. However the BSE Small-Cap index declined 0.68% to 7,144.13. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 7,178 crore as compared Rs 6976 crore yesterday, 5 August 2008.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (down 0.58% at 5,542.67), BSE Oil & Gas index (up 0.28% to 10,187.69), BSE PSU index (down 1.23% to 7,050.97), BSE Consumer Durables index (up 0.49% to 3,867.31), BSE Health Care index (down 0.42% at 4,258.15), BSE Power (down 0.79% to 2,699.03), BSE Metal index (down 3.06% to 12,859.19), BSE Bankex (up 0.24% at 7,235.38), underperformed the Sensex.

The BSE Capital Goods index (up 1.65% at 12,482.88), BSE Auto (up 2.63% at 3,919.64), BSE TecK index (up 1.52% to 3,126.99), BSE FMCG index (up 0.89% to 2,179.58), and BSE IT index (up 1.17% to 3,923.67), outperformed the Sensex.

Among the 30-member Sensex pack, 19 advanced while the rest declined.

Auto counters were in demand throughout the day. Steady fall in crude oil prices, which slumped to 3-month low, propelled auto counters. India’s top small car maker in terms of sales, Maruti Suzuki India surged 5.63% to Rs 649 on 5.15 lakh shares. It was the top gainer from the Sensex pack.

Tata Motors (up 4.02% to Rs 425.50), and Mahindra & Mahindra (up 3.10% to Rs 565), also logged gains from auto pack.

Banking shares were mixed. HDFC Bank (up 3.94% to Rs 1231), and ICICI Bank (up 1.43% to Rs 703.20), gained. However India’s largest state-run ban in terms of net profit State Bank of India Bank lost 3.79% to Rs 1519.

Shares of state-run banks overturned after strong start. Vijaya Bank (down 3.66% to Rs 38.20), Andhra Bank (down 4.45% to Rs 59), Bank of India (down 2.96% to Rs 298.30), Bank of Baroda (down 5.94% to Rs 281), and Allahabad Bank (down 1.69% to Rs 64.10), declined.

Frontline telecom shares advanced. Bharti Airtel, the nation’s top mobile operator by revenue gained 3.62% to Rs 870. The company today, 6 August 2008, said it would launch Apple Inc's third-generation iPhone in India on 22 August 2008.

India’s number two cellular services provider in terms of market capitalisation Reliance Communications (RCom) was up 0.83% to Rs 445.90. According to recent reports, the company is all set to float a $500-million tender for GSM 3G networks. At present, RCom is predominantly a CDMA-based operator which is now looking at 3G services only in the GSM space.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) advanced 0.66% at Rs 2291 on 14.07 lakh shares. The stock moved in a range of Rs 2348 and Rs 2282 so far during the day.

Oil and Natural Gas Corporation (ONGC), the country’s largest oil exploration company by market capitalisation gained 1.57% to Rs 1018.10. The company reportedly plans to scale up its gas production in Tripura and has revised the project cost to Rs 4376 crore from Rs 1817 crore.

Bharat Heavy Electricals jumped 2.97% to Rs 1822.90 after the company won first ever contract for supplying 800 mega watts supercritical boilers worth Rs 2,500 crore from Andhra Pradesh Power Development Company.

Larsen & Toubro, the country’s largest engineering and construction company in terms of sales, gained 2.11% to Rs 2756. The stock is trading 1:1 cum bonus.

Cement shares rose despite reports that they could find it difficult to raise prices when the moratorium on price freeze ends on 14 August 2008. Ambuja Cements (up 1.26% to Rs 88.50), Grasim (up 1.36% to Rs 2046), and ACC (up 3.82% to Rs 639.90), edged higher from the cement pack. In May 2008, cement firms had agreed to hold prices for three months to help the government contain skyrocketing inflation.

India’s fourth largest software services exporter Satyam Computer Services advanced 1.63% to Rs 406.15. As per reports, the company is pursuing 15-20 deals of over $50 million each and is eyeing buyouts in the Asia Pacific, US, and European continents.

TCS (up 2.91% to Rs 855), Hindustan Unilever (up 2.73% to Rs 246.60), and Wipro (up 1.63% to Rs 454.90) edged higher from Sensex pack.

Steel stocks declined for the second straight day on fears that the steel ministry would not allow steel producers to raise prices after an agreed 3-month freeze lapses on 8 August 2008.

India’s largest private sector steelmaker by sales, Tata Steel plunged 4.43% to Rs 646 on 21.68 lakh shares and was the top loser from the Sensex pack. The stock moved in a range of Rs 694.95 and Rs 642 during the day.

JSW Steel (down 4.93% at Rs 795.50), Bhushan Steel (down 3.32% at Rs 895) and Steel Authority of India (down 3.87% at Rs 145.50), slipped.

India’s third largest pharma company in terms of sales Cipla fell 1.11% to Rs 223.70 on reports Swiss drug major F Hoffmann-La Roche may move the Madras High Court against patent infringement of its HIV/AIDS drug Valcyte by Cipla. This would be a second suit by Roche against Cipla.

India’s largest power generation company in terms of revenue NTPC fell 1.10% to Rs 180.20. As per reports the company along with four international players would invest Rs 2500 crore in the next three years to generate 500 megawatts of power from renewable energy sources.

Reliance Infrastructure (down 3.19% to Rs 1010.15), and DLF (down 1.83% to Rs 543), edged lower from the Sensex pack.

HDFC, the country’s dedicated housing finance company in terms of revenue slipped 1.43% to Rs 2430. The stock came off sharply from day’s high of Rs 2585.

Reliance Natural Resources topped the turnover charts on BSE with turnover of Rs 374 crore followed by Reliance Capital (Rs 353 crore), Reliance Industries (Rs 327 crore), Larsen & Toubro (Rs 289.50 crore) and ICICI Bank (Rs 206.35 crore), in that order.

Reliance Natural Resources led the volumes chart on BSE clocking volumes of 3.60 crore shares followed by Ispat Industries (1.42 crore shares), Kashyap Technologies (1.28 crore shares), IFCI (1.10 crore shares) and IDFC (87.80 lakh shares), in that order.

Stocks of the sugar companies advanced on reports the government fixed lower-than-expected free sale sugar quota in August 2008 at 9 lakh tonnes. Triveni Engineering & Industries (up 13.25% to Rs 115), Sakthi Sugars (up 0.55% to Rs 110), Balrampur Chini (up 2.07% at Rs 93.60), Bajaj Hindustan (up 5.16% at Rs 181.50), and Shree Renuka Sugars (up 1.77% to Rs 135.40) spurted.

This move is likely to reduce the supply of sugar in the market, which will in turn drive up the price of sugar, ahead of the festival demand. Reports suggest that sugar prices in Maharashtra may spike in the first half of next year as output in the year ending September 2009 may fall by over 37%.

Shares of state-run oil marketing companies were mixed. Hindustan Petroleum Corporation (up 0.77% to Rs 236), and Indian Oil Corporation (up 1.59% to Rs 440.15), gained. However Bharat Petroleum Corporation lost 0.88% to Rs 333.30

Elecon Engineering Company jumped 6.38% to Rs 108.45 after the company said it has bagged five new orders aggregating to Rs 524.20 crore. The company made this announcement during trading hours today, 6 August 2008.

Geometric spurted 2.21% to Rs 55.50 after the company said it has signed a contract with Ford Motor Company to provide application management services for its engineering applications. The company made this announcement during trading hours today, 6 August 2008.

Hindustan Construction Company slipped 3.16% to Rs 99.60 even as the company said its joint venture has bagged an irrigation order worth Rs 1398.50 crore in Andhra Pradesh. The company made this announcement during trading hours today, 6 August 2008.

Phoenix Mills rose 2.28% at Rs 206.30 on reports its promoters are looking at divesting 15%-20% stake in the holding company to a strategic investor. The company management has already initiated talks with potential partners, including DLF, Reliance Capital and Indiabulls.

GMR Infrastructure fell 4.21% to Rs 101.15. As per reports the company is in the race for Russia's third-largest airport, Pulkovo Airport in St Petersburg, which has been put up by the Russian government for privatisation.

Meanwhile in a move that could boost stock markets, the ministry of finance is seriously looking at a proposal to make private provident funds, superannuation funds and gratuity funds that manage savings of employees of a number of corporate houses to appoint an asset management company or investment advisor to ensure that they deploy the savings of their employees efficiently. Guidelines on the same are expected soon.

The ministry also suggested doubling their exposure to the capital market from 5% and reducing their exposure to government securities from 40% to 35%.

US crude slumped $2.24 to $119.17 yesterday, 5 August 2008, after Tropical Storm Edouard hit the Texas coast without causing any major disruption to US energy operations.

European markets, which opened after Indian market, were trading higher. Key benchmark indices in UK, Germany and France were up by between 0.18% and 0.66%.

Asian markets, which opened before Indian market, edged higher today, 6 August 2008. Key benchmark indices in China, Taiwan, Singapore, South Korea, and Japan, were up by between 0.92% and 3.12%.

US stocks surged yesterday, 5 August 2008 after the Federal Reserve left interest rates unchanged and eased some of the market`s fears about the economy. The Dow Jones industrial average rose 331.62 points, or 2.94%, to 11,615.77. The Nasdaq Composite added 64.27 points, or 2.81%, to 2,349.83.