The markets have started experiencing considerable volatility ahead of the derivatives settlement due on Thursday. Though the US markets closed in the positive yesterday, most Asian markets opened with losses today. The results of the recent Bihar assembly polls added to the uncertainty.

The indices opened in the negative and slipped more than half a per cent each in morning trades. After remaining sideways, the indices started a recovery as reports suggested a decisive electoral mandate in Bihar.

Helped by the technology stocks, the indices clawed back to positive territory in early afternoon trades. But the sell-off came quick and the markets slipped deep into the red within a short period.

By the last half hour of trade, the indices had lost over a per cent each and there were no attempts at recovery. They closed near the lows of the day.

Banking stocks were among the worst hit today. OBC was the biggest loser among index stocks, closing more than 4 per cent lower. PNB lost more than 3 per cent while SBI closed nearly 2 per cent lower. ICICI Bank gave up its gains and closed lower. HDFC lost around 2 per cent.

ONGC declined close to 3 per cent, exerting considerable pressure on the indices.

Jet Airways, SCI and BPCL were among the other losers in index stocks.

Sensex closed at 8535, a loss of 76 points, and the Nifty at 2573, lower by 30 points. Nifty November futures closed at a discount of 4 points to the spot index.

Glaxo, L&T and Tata Tea were the major gainers among Nifty stocks while Oriental Bank, Ranbaxy and PNB were the major losers.

US markets rallied from a modest start yesterday and closed with good gains. The indices were helped by strong gains in Boeing, which has announced major order wins recently. The recovery in crude prices helped the oil stocks and the decline in General Motors did not affect the sentiments much.

The Dow and S&P 500 closed with gains of over half-a-per cent each. Gains on the NASDAQ were higher at two-thirds of a per cent.

Indian ADR's had a relatively bad day yesterday as many of them came under selling pressure. Satyam and VSNL were the biggest losers while MTNL and Dr. Reddy closed with gains.

Crude oil prices have staged a mild recovery this week on reports that consumption of heating oil is increasing. Weather forecasts indicate a colder than usual winter in North America which would push up demand further. Crude oil futures for January delivery gained 49 cents yesterday to close at $57.70 on the NYMEX yesterday. The commodity is trading considerably above the $58 per barrel mark in early European trades.

Ranbaxy declined sharply in intra-day trades on reports that Astra-Zeneca has filed a patent infringement suit against the company in a US court. Ranbaxy had filed an ANDA with the US FDA for a drug used in the treatment of ulcers and heartburns. ANDA is the application filed for approval before a drug can be marketed in the US. Astra-Zeneca holds the original patent on the drug, which has been considerably successful in western markets.

BHEL has reportedly commissioned the first of the 4 power units under a Rs1,100 crore order from Libya. Each gas-based unit has a capacity of 150 MW and the entire project is expected to be completed by the middle of next year.

VSNL has announced a tie-up with Microsoft to offer communication services to corporate customers. The two companies would leverage their communication network and software technologies to provide managed communication services.

Mid-Cap Action

Movements in mid-caps were in line with the general markets. They opened weak before recovering in early afternoon trades. Though they slipped again later during the session, the losses were not as much as the frontline stocks. The CNX Mid-Cap index lost 25 points and closed the day at 3731.

Software company KPIT Cummins announced two overseas acquisitions today. The company said it would acquire a majority stake in an US based business intelligence provider for $2 million. The company being acquired is expected to report revenues of $3.5 million this year. KPIT has an option to buy out the remaining stake over the next three years.

KPIT also announced the acquisition of a majority stake in a French offshore consulting company. The cost of acquisition has been reported at Euros 1.75 million, half of which would be paid in cash and the rest in stocks. The French company is expected to report revenues of Euros 3.5 million this year and KPIT has retained the option to acquire the remaining stake over the next two years.

Polaris Software was one of the biggest winners in the mid-cap space. The stock surged by as much as 10 per cent in intra-day trades on speculation that Citigroup may sell its majority stake in the company. There has been considerable market talk about a large global software company taking over Polaris.

Steel manufacturer Ispat Industries continued to face heavy selling pressure today as well. After yesterday's large decline following the announcement of an equity restructuring by the company, the stock lost another 9 per cent today.

Another stock, which saw a sharp decline, was IFCI, which closed nearly 10 per cent lower. Traders sold the stock heavily following media reports that the government is planning to wind up the financial institution. Earlier moves to merge IFCI with PNB, and then with IDBI Bank have remained unsuccessful so far.

The Singapore based subsidiary of Varun Shipping intends to acquire a large LPG carrier very shortly at a cost of $40 million. The company has a dominant market share in the LPG shipping segment and the acquisition would take its LPG fleet size to 11. The stock saw strong buying in intra-day trades and gained over 4 per cent before giving up part of the gains later in the day.

Apollo Hospitals said it would spend the money raised in the recent GDR issue for both organic and inorganic expansion. The company is planning to add 1,800 hospital beds over the next 18 months, which would take the total capacity to 7,200 beds. The company is planning total investments of Rs350 crore.

Pantaloon Retail has roped in real estate developer Unitech as a strategic partner for its proposed home furnishings retail chain. Unitech would hold a one-third stake in the company with Pantaloon holding the rest. The new company would invest Rs225 crore over the next two years to set up the retail chain.

Pantaloon is also reportedly considering acquisitions and more strategic partnerships next year. The company has reportedly set aside Rs75 crore for acquisitions. After a weak opening, the stock gained over 2 per cent in early afternoon trades.

Opto Circuits informed the exchanges that its board would meet later this week to consider a proposed public issue.

Construction companies continue to announce big order wins as the government has expedited the tendering process for infrastructure projects. Nagarjuna Constructions informed the exchanges that a consortium led by the company has won an order to construct an elevated highway in Karnataka on a BOT basis. The order value is reportedly Rs765 crore out of which the company's share is one-third.

Madhucon Projects also announced an order for the construction of a highway section in Tamil Nadu. The company informed the exchanges that the total order value is Rs360 crore.

Cadila Healthcare has informed the exchanges that it has received the approval from the French drug approving authority for the drug sertraline in capsule form. The company has stated that the French market for the drug is currently at Euros 70 million annually.

Stocks of mid-cap hotel companies attracted a lot of buying interest after Viceroy Hotels announced that ICICI Ventures would pick up a 26 per cent stake in the company. The stock closed the day locked in the 5 per cent upper circuit. Kamat Hotels, Jaypee Hotels and EIH Associate Hotels were the other significant gainers in this space.

Goldiam International, STC and Kamat Hotel were among the significant mid-cap gainers on the NSE.

Bell Ceramics, Financial Technologies and Cranes Soft were among the significant mid-cap losers on the NSE.

*Disclaimer:The author may have positions in some of 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.