Yesterday when the Sensex dropped below 11400 in intra-day trades, not many would have expected the index to climb back more than 800 points in just 2 sessions. Nearly 500 points were regained yesterday itself and the rest was covered today, once again confirming that bull market corrections and recoveries come at lightning speeds.

Helped by a recovery across Asia, the indices opened with significant gains and the Sensex went past 12000 without much effort. The Nifty went past 3600 in morning trades before both indices came under modest profit booking.

A fresh up move started early in the afternoon and gathered pace towards the end of the session. The surge was led by ONGC and followed by other heavyweights like Tata Steel, Reliance Industries and SBI.

The Sensex saw a high of 12239 in the last hour of trade while the Nifty's intra-day high was at 3642.

Sensex closed with gains of 344 points at 12218 and the Nifty gained 112 points to close at 3635. Nifty May futures closed at a premium of 10 points to the spot index.

ONGC recovered most of its recent losses and went past the Rs1,400 mark once again. The stock closed with gains of nearly 6 per cent. With today's recovery, total market capitalisation of the company has crossed Rs2 lakh crore once again.

Reliance Industries continued its recovery from yesterday and ended 4 per cent higher. The stock has recovered 6 per cent in 2 sessions after declining more than 10 per cent when the markets corrected.

RPL bounced back strongly and gained close to 5 per cent. Among other refinery stocks, Essar Oil added more than 16 per cent while MRPL ended nearly 8.5 per cent higher.

Metal stocks were firm right from early trades, led by Tata Steel. The stock regained all its losses and surged more than 6.5 per cent. SAIL ended nearly 5 per cent higher.

Nalco, which announced a price hike today, was the major gainer among aluminium stocks with gains of close to 5.5 per cent.

Hindalco ended nearly a per cent higher while Sterlite added nearly 3 per cent.

Banking stocks gained substantially in the last half hour of trade on reports that the parliament has approved amendments to the RBI Act. The RBI has been given powers to change the SLR, though this would not have any immediate impact for the banking industry.

SBI ended with gains of over 7 per cent while PNB closed more than 6.5 per cent higher.

VSNL was the biggest gainer among index stocks, closing nearly 8 per cent higher. Among other telecom stocks, MTNL added more than 4 per cent while Bharti closed more than 3 per cent higher. Reliance Communications ended 2 per cent higher.

ITC was the best performer among FMCG stocks. The stock went past Rs200 after a while and ended nearly 5 per cent higher. HLL added nearly 2 per cent.

Auto stocks had another good session with Tata Motors adding nearly 3.5 per cent and M&M gaining 4 per cent. Maruti also closed nearly 3.5 per cent higher.

Among 2-wheeler stocks, Hero Honda ended more than 5 per cent higher while Bajaj Auto added 4 per cent.

Among technology stocks, Satyam closed nearly 3 per cent higher while TCS added more than 2 per cent. Infosys and Wipro closed with gains of nearly 2 per cent each.

Zee Tele was the biggest loser among index stocks, closing more than 3.5 per cent lower.

Cipla lost 2 per cent while Grasim ended a per cent lower. HDFC Bank, Dabur and Gujarat Ambuja were the other losers.

Global markets / crude oil
US markets were subdued yesterday despite economic data showing less than expected rise in core inflation. Overall inflation, including food and energy prices, was marginally ahead of expectations. Lower inflationary pressures may allow the Fed to keep interest rates at the current level in the short term. However weak performance for the last quarter from some of the retailing companies, except Wal-Mart, affected sentiment.

The Dow declined nearly 0.1 per cent while the S&P 500 gave up close to 0.2 per cent. Technology stocks were once again the worst performers and the NASDAQ ended more than 0.4 per cent lower.

Markets across Asia recovered today on buying at lower levels. Indonesia was the best performer with gains of nearly 2.5 per cent.

Singapore, South Korea and Hong Kong ended with gains of close to 1.4 per cent each. Japan recovered from a 5-session correction and gained nearly a per cent. Shanghai ended more than 0.7 per cent higher.

Crude oil prices consolidated and closed with very marginal gains yesterday in the absence of any major triggers. The US inventory data due today would set the immediate short term direction. Near month NYMEX futures gained 12 cents to close at $69.53 yesterday. The commodity is trading with modest gains in European trades today.

Large-cap news flow

• L&T has acquired a 61 per cent stake in dredging company International Seaport Dredging. The balance 39 per cent would be held by Dutch company Dredging International. The acquisition would help L&T expand its business related to ports and harbours.
  
  
• Ranbaxy would market an anti-asthma drug in the domestic market. The drug would be marketed under license from a Dutch company. Dr. Reddy's had announced a similar launch in the same segment yesterday.
  
  
• HCL Technologies has extended its marketing partnership with Microsoft for Microsoft Dynamics in the Asia-Pacific region. Microsoft Dynamics software suite offers financial, customer relationship and supply chain management solutions.

Mid-Cap Action
Mid-cap stocks outperformed large caps as a very large number of smaller stocks ended with significant gains. The index opened above 5000 and surged nearly 4 per cent in afternoon trades. The CNX Mid-Cap index gained 167 points, or 3.37 per cent, to end the day at 5117. Market breadth was highly positive on the NSE.

The number of stocks closing on upper price circuits was back to the levels seen earlier in the month. Dewan Housing, Phoenix Lamps, Prakash Limited, and Mahindra Gesco closed on the 20 per cent circuits while Hitachi Home Solutions and Elder Pharma closed more than 19.5 per cent each higher.

Goetze India, Bombay Dyeing and Bata India were among the other major mid-cap gainers.

Bhagyanagar Metals, Gangotri Textiles and Oil Country Tubular were among the significant mid-cap losers on the NSE.

Mid-cap news flow

• Bajaj Hindustan would set up a subsidiary in Brazil, the largest producer of sugar in the world. The company has not disclosed the investment plans.
  
  
• Aurobindo Pharma has completed its FCCB issue and has raised $200 million. The 5-year bonds would be listed in Singapore and are convertible at a premium to the current market price.
  
  
• Lupin has announced a bonus issue in the ratio of one share for every share held.
  
  
• Ontrack Systems has acquired US based Intellisys group for $6.94 million in a part-cash, part-stock deal. The deal also involves Intellisys subsidiaries in Australia and India.
  
  
• Nagarjuna Constructions has received new orders totalling Rs362 crore. The new orders include an overseas order worth Rs116 crore for a water supply pipeline from Oman.
  
  
• Spentex Industries has issued non-convertible debentures worth Rs50 crore to UTI Bank.
  
  
• Dolphin Offshore has acquired 2 anchor handling tugs for an undisclosed amount.
  
  
• Nicholas Piramal said it is actively pursuing acquisitions as a growth strategy. The company has not yet firmed up any deals.
  
  
• The board of Rama Paper would meet later this week to consider a preferential allotment of shares to promoters.
  
  
• The board of Indoco Remedies would meet this week to consider the merger of its wholly owned subsidiary Indoco Healthcare with the company.
  
  
• Classic Diamonds would consider a preferential issue of equity shares or convertible warrants to investors other than promoters.
  
  
• The open offer by EDS for an additional 20 per cent of MPhasis BFL opened today and would close on 05 June
  
  
• Gangotri Textiles has fixed the price band for the follow-on public issue at Rs41 to Rs46 per share.
  
  
• Genus Overseas would raise up to Rs100 crore from a preferential issue of shares or convertible warrants to promoters and other investors. The issue would include an issue of 18.85 lakh shares at Rs261 to a Mauritius based investor.
  
  
• Everest Kanto would invest $50 million in its proposed Chinese subsidiary. The required funds would be raised from a FCCB or GDR issue.
  
  
• SQL Star has acquired a US-based consulting company for an undisclosed amount. The acquired business has revenues of $5 million.
  
  
• Orissa Sponge would issue 14.1 lakh convertible warrants at Rs41.14 per share to an investor.
  

*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.

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