After yesterday's disappointing close after a spectacular start, traders were prepared for further weakness today. However, recovery in the US and other Asian markets helped the indices to start the day on a very firm note.

In a repetition of yesterday's session, the indices gave a considerable part of the early gains within the first half hour. But instead of declining further, the markets started a rally, which ended in the biggest-ever single day gains for the frontline indices.

Sensex went as high as 9589 - 660 points from yesterday's closing level. Nifty touched a high of 2814, 181 points from yesterday's closing level.

Sensex closed with gains of 616 points at 9545 and the Nifty gained 166 points to close at 2799. Nifty June futures ended at a discount of 6 points to the spot index.

Engineering stocks were among the biggest gainers today. BHEL erased all its losses this week and ended with gains of nearly 14.5 per cent. L&T added over 11. 5 per cent and ABB closed nearly 4.5 per cent higher.

Cement stocks rallied from morning trades and were firm throughout the day. Grasim was the biggest gainer among index stocks, closing 14.5 per cent higher. Gujarat Ambuja gained 9 per cent while ACC closed nearly 6 per cent higher.

Infosys led the tech pack from the front, adding over 9.5 per cent. Statement from the company's management that earnings are well on track and the company is on the look out for acquisitions helped the stock considerably.

Wipro closed nearly 8 per cent higher and TCS added 4.5 per cent. HCL Tech ended 7.5 per cent higher and Satyam gained 5 per cent.

Reliance Industries added nearly 4.5 per cent while IPCL ended more than 10.5 per cent higher. ONGC recovered from early weakness and ended moer than 4 per cent higher.

MTNL soared in afternoon trades and closed with gains of more than 12 per cent. VSNL added 7.5 per cent and Bharti ended 4.5 per cent higher.

Bajaj Auto was the big gainer among the auto pack, closing more than 10 per cent higher. Hero Honda ended 9 per cent higher.
Tata Motors, Maruti and M&M rallied together and closed with gains of over 5 per cent each.

Among FMCG stocks, Tata Tea added nearly 9.5 per cent and Dabur gained 9 per cent. HLL rallied nearly 8.5 per cent and ITC closed more than 5.5 per cent higher.

Tata Steel closed more than 7.5 per cent higher and SAIL added a much lower 4 per cent. Among aluminium stocks, Hindalco gained 6.5 per cent and Nalco added 2.5 per cent.

HDFC Bank was the big gainer among banking stocks, closing more than 9 per cent higher. ICICI Bank added close to 7 per cent while SBI gained more than 4 per cent. PNB and OBC added 2.5 per cent each.

Among financial services stocks, HDFC gained over 6 per cent and Reliance Capital soared more than 13 per cent.

Among pharma stocks, Glaxo added over 8 per cent and Cipla closed nearly 5 per cent higher. Dr. Reddy's and Sun Pharma added over 4 per cent each while Ranbaxy gained close to 4 per cent.

Among other gainers, SCI added more than 10.5 per cent and Zee Tele closed 9.5 per cent higher.

Global markets / crude oil
US markets recovered yesterday on bargain hunting in manufacturing and technology stocks even as consumer price data showed further rise in inflation. Interest rate sensitive stocks remained weak but oil stocks recovered as crude oil prices gained ground.

The Dow closed with gains of over a per cent while the S&P 500 gained only around 0.5 per cent. NASDAQ recovered after eights days of losses and closed around 0.65 per cent higher.

Most Asian indices had a good day following the recovery in US. The decision by Bank of Japan to maintain interest rates at current levels lifted sentiment in the region. Japan and Hong Kong closed with gains of well over a per cent each while Singapore added nearly a per cent. Thailand, Malaysia and Shanghai ended with more modest gains.

Malaysia continued its decline and gave up more than 0.7 per cent each while South Korea ended nearly 0.2 per cent lower.

European markets opened with significant gains, helped by the recovery in other global markets. Major Western European indices are trading with gains of around 1.5 per cent each.

Crude oil prices recovered yesterday after suffering heavy losses earlier in the week. US inventory data showed a higher than expected decline in crude oil stocks. Near month NYMEX futures gained close to a per cent yesterday and closed at $69.14 per barrel. The commodity has gained further and is closing in on the $70 per barrel mark in early European trades today.

Large-cap news flow

• L&T has won a contract worth Rs750 crore to widen an 83km highway stretch in Gujarat on a BOT basis. The project would be completed in 30 months and the company would have a concession period of 15 years.
  
  
• TCS has refused to confirm media reports that it is close to acquisition a UK based IT services company with development facilities near Delhi. The reports had mentioned that the deal size would be between $800 million and $1 billion.
  
  
• GE Shipping has placed an order for a new jack-up offshore exploration rig with a Singapore based shipyard. The vessel would be delivered in 2009.
  
  
• SAIL is in discussions to acquire Neelachal Ispat, National Iron & Steel and Maharashtra Elektrosmelt. The acquisitions are subject to government approval.
  
  
• SCI would hold a 50-per cent stake in a JV to acquire and operate chemical carriers and other ships. Forbes Gokak and a privately held company would hold minority stakes in the venture.
  
  
• Reliance Communications has received the approval of shareholders, creditors and other stakeholders for the merger of Reliance Infocomm and the network division of Reliance Communication Infrastructure with the company.
  
  
• Ranbaxy has refused to confirm media reports that the company is planning to acquire a domestic pharma company. Reports had indicated that Ranbaxy would acquire a large stake in a Hyderabad based company with which it had entered into a product agreement recently.

Mid-Cap Action

The surge in mid-caps and small caps were not as strong as the larger stocks today, as the rally was not so broad-based. Though a large number of stocks bounced back strongly and closed with significant gains, many others remained weak.

The CNX Mid-Cap index notched up gains of over 2 per cent in early trades and built on those gains later in the day. The index finally ended with gains of 210 points, or 6.29 per cent, to end the day at 3545. Market breadth on the NSE was highly positive by the end of the day.

The BSE mid-cap index gained 5.47 per cent and the BSE small cap index closed 3.91 per cent higher.

Hinduja TMT was the biggest mid-cap gainer, closing 28 per cent higher. Bindal Agro, TV 18, Kirloskar Brothers, IndiaBulls, India Cements and Gujarat Alakli all closed with gains of close to 20 per cent each.

ETC Network, Alfa Laval, Bajaj Hindustan, Triveni Engineering, Aban Loyd, Pratibha Industries, Mysore Cements, Balrampur Chini, Gitanjali Gems and Sriram Transport Finance were among the other mid-cap gainers.

Essel Propack, Hotel Leela, Wyeth, Era Constructions, Unitech and GMR Industries were among the major mid-cap losers.

Mid-cap news flow

• Nicholas Piramal would acquire the manufacturing facilities of Pfizer in UK for an undisclosed amount on an asset transfer basis. The unit which employs 450 people currently supplies key drugs for sales in US, Europe and Japan. The deal also includes a supply agreement with Pfizer with potential revenues of $350 million by 2011.
  
  
• Cadila Healthcare has received preliminary US FDA approval for a cardiovascular drug in tablet form. The company said sales revenues of the patented version of the drug in the US were $1.8 billion per annum.
  
  
• Varun Shipping said its proposed Singapore Depository Shares issue would open only when the market conditions are more conducive.
  
  
• Mysore Cements has denied media reports that Nesher Cements of Israel and French cement major Lafarge are in negotiations to acquire a stake in the company.
  
  
• Inox Leisure said its new multiplex in Rajasthan would become operational by tomorrow.
  
  
• The board of Kinetic Motor would meet next week to consider raising of long term funds.
  
  
• Kale Consultants has received a 5-year revenue accounting contract from British airline BMI. Potential revenues over this period are around 8 million Pounds.
  
  
• i-Flex Solutions would provide technology support for a Karnataka government initiative to improve the quality of primary schools.
  
  
• Numeric Power Systems would distribute high capacity UPS systems manufactured by a French company.
  
  
• Ciba Speciality Chemicals would form a JV with a Hyderabad based company to manufacture an antimicrobial agent used in toothpaste, soaps and deodorants. Ciba would hold a 51 per cent stake in the venture.
  

*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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