Indices lose close to 2 per cent each as selling intensifies

26 December 2005

After Friday's weakness, the markets did not even make an attempt at a bounce back today. After opening flat, it was a steady downtrend for the indices as they slipped nearly 2 per cent each by the end of the day.

Unwinding of derivative positions ahead of the settlement this Thursday was the major factor behind the market decline. The indices have not seen any significant correction in this rally which started in November. Every correction has been mild and short lived and the indices always managed to trend higher in this period.

By late afternoon, the Sensex had lost more than 200 points from the highs of the day at around 9050 and the Nifty slipped well below 2750. The last half hour averaging helped both the indices to more respectable closing levels.

VSNL was the biggest loser among index stocks on unconfirmed reports that the government may delay the sale of its residual stake in the company. The stock closed more than 10 per cent lower.

Other telecom stocks like Bharti and MTNL also came under heavy selling pressure. Both stocks closed with losses of more than 5 per cent each.

Utility stocks Reliance Energy and Tata Power both gave up a major part of their recent gains today. Tata Power closed 4 per cent lower while Reliance Energy lost close to 3.5 per cent.

Nalco was the biggest loser among metal stocks, closing more than 3.5 per cent lower. SIL lost close to 3.5 per cent while Tata Steel closed flat.

ICICI Bank was the biggest loser among banking stocks, closing nearly 4 per cent lower. SBI lost more than 2.5 per cent while HDFC Bank lost over 1.5 per cent.

Gujarat Ambuja was the biggest loser among cement stocks, closing more than 4 per cent lower. ACC closed more than 3 per cent lower and Grasim ended 2.5 per cent lower.

Satyam was the biggest loser among technology stocks, losing more than 2 per cent. Wipro lost well over a per cent while Infosys closed nearly a per cent lower. TCS also lost ground today.

Auto stocks also corrected and M&M was the biggest percentage loser in this sector, closing nearly 5 per cent lower. Maruti lost nearly 2 per cent and Bajaj Auto lost almost 3 per cent.

Sensex closed at 9086, a loss of 171 points, and the Nifty at 2750, lower by 55 points. Nifty December futures closed at a discount of 13 points to the spot index.

Tata Steel was the only Nifty stock which managed to close without any losses while VSNL, Bharti and MTNL were the major losers.

Larsen&Toubro has informed the exchanges that it has won a new order from Gangavaram Port Limited. The order for construction of breakwaters and shipping berths is valued at over Rs400 crore.

Sun Pharma has informed the exchanges that it has acquired the whole of Able Labs, based in the US. The acquisition was made through an auction process conducted by a court. Further details are not available.

Tata Chemicals would fund its latest overseas acquisition from internal accruals and proceeds of the recently concluded FCCB issue. The company had announced last week that it has signed a definitive agreement to acquire Brunner Mond, one of the largest soda ash manufacturer's in the UK. Tata Chemicals said its consolidated top line would cross $1 billion, including Brunner Mond. (Tata Chemicals to acquire majority stake in the UK's Brunnner Mond)

The government may put off the sale of its residual stake in VSNL. According to reports, the decision is because of the unresolved issue of surplus land held by the company. The government currently holds a 26 per cent stake in the company.

Newspaper reports indicate that ITC is planning to enter the more than $1 billion per annum market for toilet soaps. The company has been aggressively expanding its consumer products portfolio to reduce the dependence on tobacco products. ITC had successfully launched packaged food products and stationery.

A consortium including Shipping Corporation has won a contract from Petronet LNG for transporting natural gas from Qatar to India. The order is reportedly worth around $700 million over a period of 25 years. Earlier, a consortium including Varun Shipping was awarded the contract by Petronet which was later cancelled and fresh bids were called for.

According to media reports, Indian Oil has been approached by the government of West Bengal to acquire management control of Haldia Petrochemicals. The state government is set to acquire a more than 35 per cent stake from another promoter, which would be transferred to Indian Oil. The PSU oil major already holds a more than seven per cent stake in Haldia Petro.

Mid-Cap Action

Mid-caps also continued their weakness from Friday and followed the weak trend in the broad markets. By the end of the session, mid-cap index, at over 2 per cent, had lost more than the frontline indices. The CNX Mid-Cap index lost 84 points and closed the day at 3880.

Glenmark Pharma has announced that it would acquire a drug marketing firm based in South Africa. The company said it expects the new acquisition to add more than $3 million to the top line in 2006. Cost of acquisition was not disclosed.

Gujarat Heavy Chemicals has informed the exchanges that it has acquired an over 90 per cent stake in a US based textile manufacturer. The acquired company reportedly had revenues of around $250 million.

Sundram Fasteners has announced that it has signed an agreement to acquire the whole of an auto ancillary company based in Germany. The company said the acquisition would be with effect from 01 January and the cost of acquisition would depend on the net asset value of the German company as of 31 December.