Market Close: Consolidation??

A volatile start for the week as indices traded ranged after a green opening. Asian Indices traded in green. It was a sea-saw ride for the Indian indices as it juggled both the sides. Indices felt the pinch of profit booking as it slipped over 100 points at the mid session, later buying in index heavy weights helped to recover from lows. Sensex extended the gains and made fresh all time high before ending the with marginal gains. Profit taking was seen in Auto, Banking, Metals, FMCG and IT stocks. Cement, Power and PSU stocks cheered the day. Cement stocks rallied ahead of its monthly sales numbers.

Reliance Energy was the star performer for the day; it stood as the top gainer and ended up by 12%. Reliance Power a part of Anil Ambani group, where REL holds 50% stake will raise Rs 12000 cr through IPO. The money is used for various projects like Sasan project etc. As result of this all the energy stocks rallied for the day. Investors preferred to buy mid and small caps which outperformed the front line index. Asian markets closed in green, Europe trading in green.

Sensex closed up by 38 points at 17328.619. It was helped up by gains in Rel Energy (1349.4,+12 percent), NTPC (206,+6 percent), RCVL (611.9,+4 percent), ONGC (997.1,+4 percent) and Cipla (188.65,+3 percent). Restricting the gains are SBI (1893.5,-3 percent), HDFC Bk (1404,-2 percent), Bajaj Auto (2484.1001,-2 percent), BHEL (1990.05,-2 percent) and ITC (185.95,-2 percent).

We met with Ashco Industries over the weekend. The company has a 102 bed clinical research centre in Mumbai. The company is into transition from Medical Equipment trading business to Clinical research outsourcing. The company has about 120 core professionals ready for this work including 4 PHDs, 3 MBBS Postgraduates. They have the past experience in Phase I and clients include Pfizer, Cipla, Torrent etc. This is a small company having big plans. $ 80 bn worth drugs are expected to go off patent in the next 3 years. The existing companies are likely to increase efforts to create new IPRs and Ashco is well placed for that with its facilities. However, the hurdles are large before that can happen. It needs the necessary certifications for its facilities. Interesting company, but hurdles bit too many to deal with. Vimta is another in the same space we mentioned a couple of weeks ago. However, a space which certainly as the prospects, but still need to find one with scale and size to make it big.

State Bank of India (SBI) informed that it may cut interest rates on new housing loans in the forthcoming festival season and might cut home loan rates to existing customers. The move is on back of hope that RBI may bring down interest rates in its upcoming policy review. RBI is schedule to announce its half yearly credit policy review on October 30th and all the major players in the housing loan segment are waiting for the Central bank's decision on interest rates. SBI is currently offering home loans at 12.75% on fixed interest rate while the floating interest rate ranges between 10.75-11.25% depending on tenure. ICICI bank and HDFC have also cut interest rates on loans booked till October. IDBI also reduced the fixed interest rates on home loans by almost 1% with effect from September 1st. However, there is some market speculation that RBI may raise CRR rates in near future. As result of this banking stock traded mixed.

Technically Speaking: It was a sea saw session for the whole day before closing. Sensex touched intraday high of 17425 and low of 17145. Overall breadth was in favor of Advances, where the Advances stood at 1601, while Declines at 1145. The turnover was good at Rs 7197 cr. Sensex rallying with a lot of mid caps. The trend is up and likely to see more mid caps and small caps moving up. The market is a clear buy on dips for mid caps and small caps.