Indices close flat after volatile trade

17 October 2005

The markets were highly volatile today as the global cues were mixed. Despite a positive closing by US markets on Friday, Asian markets were subdued and some of them saw considerably weak openings. Oil prices bounced back today after remaining flat last week.

Selling by FII's continued in the cash segment last Thursday and they were heavy sellers on the derivatives segment on Friday too.

The indices opened the day on a relatively strong note and ran up gains of over half a per cent each within minutes of opening. However, the markets lost no time in to give up these gains and go into the negative.

After declining over half a per cent each, the indices bounced back and went back into positive territory by noon. News of FII selling in the derivatives segment on Friday led to more weakness and the indices dipped once again.

Short covering during the last hour of trade pulled the indices out of the red and they surged to retest the highs posted in morning trades. The closing minutes saw some minor selling and the indices gave up their gains once again and closed the day on a flat note.

Two-wheeler stocks had a very good day, led by Bajaj Auto. Buoyed by strong quarterly results, Bajaj Auto surged 6 per cent in today's trade. Hero Honda added a per cent. Maruti was another winner from the auto space adding close to 2 per cent. However, Tata Motors lost well over a per cent.

Among FMCG stocks, ITC added over a per cent while HLL added close to one-and-a-half per cent.

Reliance Industries closed the day with gains of close to a per cent. Group company IPCL was one of the best performers among index stocks, adding well over 3 per cent.

Steel stocks staged a bounce back after last week's sell off. SAIL added close to 2 per cent while Tata Steel added over 2 per cent.
BHEL was another big winner, adding over 4 per cent.

Pharma companies Dr Reddy and Ranbaxy remained weak today as well. Dr Reddy lost over 2 per cent while Ranbaxy declined close to a per cent.

However, Cipla attracted a lot of buying interest and closed almost 5 per cent higher. The company is reportedly readying to launch a generic vaccine to counter bird flu.

Private banking stocks were weak today and results announced by HDFC Bank could not turn around their fortunes. After opening strongly, ICICI Bank declined and closed with losses of well over a per cent. HDFC Bank lost 2 per cent after the announcement of results before recovering part of the losses. SBI bucked the trend in large banks and closed more than a per cent higher.

Sensex closed flat at 8202, a gain of 1 point, and the Nifty at 2485, higher by a point. Nifty October futures closed at a discount of 2 points to the spot index.

Dabur, Bajaj Auto and Cipla were the few gainers among Nifty stocks while VSNL, GAIL and Tata Tea were the major losers.

Crude oil futures rallied over 2 per cent in opening Asian trades today after reports of another storm in the Gulf of Mexico and bomb explosions in Iran. Crude futures for November delivery gained over $1.3 per barrel to touch $64. The commodity is trading above $64 per barrel in early European trades today.

Second quarter profits of HDFC Bank rose 31 per cent to Rs199.6 crore from Rs152 crore reported during the same quarter of previous year. Profits were higher by almost 9 per cent as compared to the Rs183 crore reported for the first quarter. Total revenues for the quarter is at Rs1,283 crore as against Rs867 crore during the previous year.

Media reports indicate that ONGC may tie up with global petroleum major Shell to set up a bitumen refinery at Mangalore. Bitumen demand in the country is growing at s steady rate with more and more road projects being taken up. The proposed project would source crude bitumen from MRPL and refine it to produce high grade bitumen.

A financial newspaper based in the UK has reported that global oil giant BP has sounded out Reliance Industries to acquire a stake in its natural gas fields in the KG basin. Top BP officials including its chairman were in India last week to launch joint ventures with PSU oil companies. Reliance has not responded to the reports.

Dabur announced that its board would meet next week to consider a bonus issue. The stock surged well over 10 per cent after the announcement before closing the day with gains of close to 9 per cent.

Mid-Cap Action

Mid-caps were also volatile during the day, but could not manage the last hour recovery like the frontline stocks. After two intra-day attempts at recovery, the mid-cap index closed the day half a per cent lower. The CNX Mid-Cap index lost 18 points and closed the day at 3661.

The Bombay High Court has set aside the sale of surplus textile mill land by National Textile Corporation. The PSU company had auctioned part of its land holding in Mumbai recently. Developers including an associate company of IndiaBulls had acquired parcels of land at very high prices.

The High Court has specified that only one-third of the mill land can be used for commercial development. Another one-third of the area should be set aside for low cost housing projects and the remaining one-third for open public spaces. NTC and buyers are expected to appeal to the Supreme Court against this verdict.

The verdict, if upheld by the Supreme Court, would have negative impact on companies like Bombay Dyeing which have large holdings of mill land in Mumbai. Bombay Dyeing had drawn up an ambitious development plan. The stock was one of the significant losers today.