If the markets surprised most traders and investors by the severity of the fall last Thursday, today they surprised them with the strength and speed of the recovery. It was almost like last Thursday, in the reverse direction, as the indices almost recovered what they lost that day.
A strong opening was expected after the decline in oil prices and the strong performance across most Asian markets in today's opening trades. The fact that FII's pumped in more than $100 million last Thursday when the markets crashed also added to the positive sentiment.
The indices did not disappoint and opened with a huge positive gap and ran up gains of a per cent each in early trades. While a large section of the traders were expecting a volatile session with the indices giving up some of the early gains later in the day, what happened afterwards was way beyond expectations.
The indices gained from strength to strength throughout the day as most frontline stocks lost no time in regaining lost territory. Last week's fall had encouraged the build up of short positions and the indices surged ahead as these positions were covered. It was one strong up move with barely a hint of profit booking through out the day.
The breadth of the market was so strong that there were no losers among the 30 Sensex stocks and only 1 loser, BPCL, among the 50 Nifty stocks. On the NSE, there were more than 7 advancing stocks for every declining stock.
The mega caps ONGC and Reliance Industries led from the front. ONGC added close to 2 per cent and Reliance closed with gains of over 4 per cent.
Technology stocks also bounced back strongly, led by TCS. The stock added close to 4 per cent while Infosys closed with gains of over 3 per cent. Satyam and Wirpo added more than 4 per cent each.
The auto stocks were led by M&M, closing with gains of more than 5 per cent. Maruti added more than 4 per cent while Tata Motors added well above a per cent. Among the 2-wheeler stocks, Hero Honda closed one and a half per cent higher while Bajaj Auto added a per cent.
Metal stocks were led by SAIL, gaining more than 4 per cent. Tata Steel added more than 3 per cent. Hindalco closed more than 3 per cent higher.
Cement stocks also attracted a lot of buying as Gujarat Ambuja gained more than 5 per cent and ACC closed more than 2 per cent higher.
ITC maintained its recent uptrend with a close to 4 per cent gain while HLL added more than 3 per cent.
Among the banking majors, SBI added well over 2 per cent while ICICI Bank and HDFC Bank closed higher by a per cent each.
Sensex closed at 8479, a gain of just 257 points, and the Nifty at 2558, higher by 80 points. Nifty September futures closed at a discount of 8 points to the spot index.
Dabur, Jet Airways and M&M were the biggest gainers among Nifty stocks while BPCL was the only loser, closing marginally lower.
Crude oil prices declined during a special trading session on the NYMEX on Sunday following less than expected destruction from Hurricane Rita. Prices were also affected by a reported statement from the US Fed chairman that current oil prices have already discounted hurricane damages.
October futures touched a recent low of $62.65 on the NYMEX yesterday. The commodity is trading close to $64 per barrel in early European trades today.
Maruti Udyog will hike prices of its passenger cars from 01 October. The company's largest competitor, Hyundai, would also raise prices from next month. Maruti closed with gains of over 4 per cent.
Satyam Computers has won an order from the World Health Organisation to implement a global management system across various locations. The ERP system would be based on Oracle and would be installed in WHO offices in more than 140 countries.
A subsidiary of engineering major L&T has won an order for constructing an electric transmission line in Oman. The order is reportedly worth Rs165 crore and is to be implemented by the first quarter of 2007. L&T owns 65 per cent of this subsidiary with the rest being held by a local group in Oman. The stock added 2 per cent.
NTPC has commissioned the fourth generating unit at its Rihand super thermal project. The unit has a capacity of 500mw and takes the total capacity of the station to 2,000mw. The stock added more than 4 per cent.
Jet Airways replaced Colgate Palmolive on the Nifty today. The stock recovered from a declining trend for the last two months and closed with gains of more than 5 per cent. The stock had declined below its IPO price of Rs1,100 in the downtrend, but managed to end marginally above the issue price today.
Pfizer India has reported an over 60 per cent increase in profits for the quarter ended August 2005. Revenues for the quarter were higher by over 15 per cent as compared to the same quarter of the previous year.
According to news agency reports, Indian Oil has started exporting petrol in small quantities. The company has been a buyer of refined products in the past to meet domestic demand. Indian Oil is expected to increase its export efforts in future as more refining capacities come on stream within the country. Indian Oil closed 2 per cent higher.
Reliance Energy has re-started power generation from a 250mw unit at its Dahanu plant. The unit has undergone a major overhaul. The stock closed 3 per cent higher.
Mid-caps bounced back very strongly and continued the recovery started on Friday. Heavy buying was seen in most of the momentum stocks which are traders' favourites. There were a large number of liquid mid-caps which closed the day with gains of over 5 per cent. The CNX Mid-Cap index added 113 points and closed the day at 3775, a gain of over 3 per cent.
Many stocks on the BSE Small Cap Index also recovered smartly as if nothing had happened last week. The index surged ahead as many of smaller stocks were locked in the new 5 per cent upper circuit. Even the 100 per cent up front margin on some of these stocks did not dampen the buying interest. The index closed the day with gains of close to 5 per cent.
Media reports suggest that Britannia Industries is participating in the bidding process for UK based Typhoo Tea. Britannia is reportedly one of the three bidders for the third largest tea company in UK, behind Tetley and Unilever. The acquisition is expected to cost over $150 million.
Matrix Labs would acquire 60 per cent of Chinese pharma company MChem for an undisclosed sum. The company had signed a collaboration agreement with MChem earlier this year. The Chinese company manufactures basic and intermediate chemicals, active pharma ingredients and finished drugs. The company reportedly had a turnover of $35 million last year.
Pharma company Lupin Labs has entered into an agreement with South African drug company Aspen to market TB drugs in that country. Under the agreement, Aspen would pay $2 million to Lupin as milestone payment apart from profit sharing. Aspen had entered into an agreement with Matrix Labs last week for joint ventures in India and South Africa.
RBI has approved the merger between Centurion Bank and Bank of Punjab, which will be effective from 01 October. The new entity would be called Centurion Bank of Punjab. Shareholders of Bank of Punjab would be issued 9 shares of Centurion for every 5 shares of Bank of Punjab held by them.
Gujarat NRE Coke informed the exchanges that its Australian subsidiary has started commercial operations at a coking coal mine. The mine would have a capacity of 1-million tonnes per annum, which the company is planning to raise to 2-million tonnes. The company would also start operations at a second coal mine in Australia shortly.
Construction company Gammon India would raise up to $100 million from an overseas GDR or FCCB issue.
Another company planning an overseas equity/bond issue is Mawana Sugars. The company's board would meet shortly to consider an issue of up to $110 million.
The board of directors of SRF has approved an expansion plan to raise capacity at its Gwalior plant. The company would spend more than Rs100 crore for the expansion. The company has commissioned a new polymerisation line with a capacity of 20 tonnes per day along with 4 spinning lines. Another polymerisation line would be commissioned shortly.
The board of directors of Hotel Leelaventure will meet early next month to consider setting up a new hotel in Pune. The company had recently raised €60 million from an overseas FCCB issue and had acquired a majority stake in a beach hotel in Kerala for Rs60 crore. The stock closed with gains of over 5 per cent.
FCS Software, a recent listing on the exchanges, bounced back strongly after declining on Friday. The stock had attracted lot of trading activity since its listing and had gained significantly after listing. The stock closed at the 20 per cent upper circuit today.
BSL Limited, Rajvir Industries and FAG Precision Bearing were among the significant mid-cap gainers on the NSE.
Financial Technologies, NEPC India and IFB Agro were among the significant mid-cap losers on the NSE.
*Disclaimer: The author does not have any position in the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.