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Indices bounce back

Rex Mathew*
28 March 2005


The keenly anticipated relief rally saw the Sensex rallying more than 100 points in morning trades. The indices were partly supported by operators covering their short positions ahead of the futures and options settlement due on Thursday. However, the indices gave up part of their gains in the last half an hour as selling emerged at higher levels. Sensex closed at 6511, up 68 points and the Nifty at 2029, up 14 points. Nifty futures are quoting at a 6 point premium to the spot index.

In a very innovative move, Dr Reddy's has roped in the venture capital arm of ICICI Bank to finance its plans to market generic drugs in the US. Indian companies have been filing many new applications for generic drugs and patent challenges in the US recently. Commercialisation of these applications involves considerable financial outlays and associated risks. Under the deal, ICICI Ventures would finance the commercialisation up to $56 million in return for royalty payments as and when the drugs are marketed.

The profitability of major Indian drug companies have been under pressure because of higher spending on research and costs involved in entering developed markets. This deal may help Dr Reddy's to part manage the pressure on profits and take a longer term view. The stock closed more than 2 per cent higher.

Foreign brokerages have been circulating reports among their clients indicating a fresh round of consolidation moves in the Indian pharma industry. These reports suggest that many of the frontline companies including Ranbaxy, Dr Reddy's and Cipla could be take over targets for global pharma majors. Global companies are expanding their research facilities in India in a major way and many of these companies have very strong research capabilities. All frontline pharma stocks closed higher for the day.

ITC has announced plans to invest up to Rs14,000 crore in various businesses in the next few years. The company is positive in its outlook for all its divisions. The investments will go to upgrading and expanding capacities for cigarettes, garments and paper. The company is also looking at a major expansion drive for its hotel division and is repositioning itself as a diversified rather than just a tobacco company. The stock closed marginally lower after trading firm in the morning.

There are reports that Tata Motors is looking to sell its passenger vehicles in the Malaysian market. It already sells commercial vehicles in that country. The stock closed marginally higher while competitor Maruti gained close to 2 per cent.

Tata Steel is planning to invest up to Rs21,500 crore over the next 5 years to increase capacity to 15-million tones per year. Bulk of this investment would go into the new steel plant being planned in the state of Orissa. The company is also looking at overseas acquisitions though it says it is not looking at taking over sick steel companies. The stock gained more than a per cent.

Private sector banking stocks saw strong gains. HDFC and HDFC Bank which were beaten down considerably over the last week led the bounce back with gains of close to 3 per cent each. ICICI Bank chipped in with gains of over a per cent.

Capital equipment majors L&T and ABB were the other 2 major gainers among Nifty stocks with gains of more than 3 per cent each. Tata Power also gained over 3 per cent.

Tech stocks Satyam, TCS and Infosys posted gains while Wipro closed with marginal losses.

Telecom stocks declined even in the general optimism that prevailed during the day. Frontline telecom stocks VSNL, MTNL and Bharti Tele all ended with losses. There are reports that BSNL has demanded over Rs1,800 crore from MTNL towards access deficit and inter-connect charges. Meanwhile, the Supreme Court has stayed the Delhi High Court order directing Reliance Infocomm to compensate BSNL and MTNL in the international call re-routing case.

Mid-cap action
Mid-cap index gained almost one and a half per cent as most of the stocks recovered from the losses incurred last week.

Smaller pharma companies Glenmark and Shasun announced a tie-up to develop and market generic drugs in the US market. Under the deal Shasun will develop and manufacture the drugs while Glenmark would do all the filing and commercialisation. Both stocks gained good ground with Shasun moving up close to 5 per cent.

Jindal Vijayanagar Steel saw some huge block deals in which more than five million shares changed hands. The stock gained 3 per cent. Other mid-cap steel stocks also regained some ground.

Mid-cap bank stocks, both private and public sector, had a good day. Federal Bank, J&K Bank and Bank of Punjab were the gainers among private sector stocks while Canara Bank, Allahabad Bank and Syndicate Bank stood out among public sector banks.

Industrial equipment manufacturer Texmaco Ltd gained on news of some order wins by the company. A major manufacturer of industrial boilers and railway wagons, the company had posted excellent sales growth in the quarter ending December. The stock gained more than 3 per cent on the news.

Construction stocks continue to buzz around with strong gains posted by almost all stocks in the sector like IVRCL, Nagarjuna, Hindustan, Madhucon ,etc. IVRCL whose public issue received a good response priced the shares at Rs395 as against a current market price of around Rs470. Gammon India was the sole loser in this pack with losses of 5 per cent.

Telecom equipment companies Avaya Global (formerly Tata Telecom) and ITI made smart gains. ITI has recently signed an agreement with Alcatel of France for manufacturing telecom equipment.

Though the recovery was strong till afternoon, the last hour sell off which saw the indices giving up most of their gains indicates that the correction may not be fully over. The sell off was a clear indication of operators utilising the rally to sell off the position and move to send this article to a friendcash. The futures settlement due this week is reportedly progressing well, though some more volatility can be expected in the next three days.

*Disclaimer: The author doesn't have any position in 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.

Other articles by Rex Mathew

List of general reports on markets

List of general reports on finance

Market: Indices

National Markets
Gain (+) / Loss (-)

SENSEX
6,515.85 +72.98
NIFTY 2,035.90 +20.50
Last Update : 28 March, 2005, 16:15 PM

Market Counters
Figures in Rupees

BSE 30
Scrip Name Open High Low Last Price
LARSEN & TOUBRO LTD. 982.00 1,018.50 980.50 1,009.60
ZEE TELEF LT 130.50 135.00 130.50 134.15
TATA POWER 343.80 355.85 342.50 351.20
HDFC BANK LT 535.00 538.00 530.55 534.70
DR.REDDY'S LABORATORIES LTD. 755.25 779.90 755.25 772.30
SATYAM COMP 388.00 405.90 388.00 398.60
HOUSING DEVELOPMENT FINANCE CO 695.00 713.70 694.90 709.45
MARUTI UDYOG 416.80 430.70 414.15 421.20
ICICI BANK L 390.00 400.95 390.00 398.10
RANBAXY LABORATORIES LTD. 1,054.00 1,085.90 1,054.00 1,071.65
CIPLA LTD. 256.00 259.80 255.00 257.75
INFOSYS TECHNOLOGIES LTD.-ORDI 2,160.35 2,215.00 2,160.35 2,190.70
GUJARAT AMBUJA CEMENTS LTD. 409.70 412.25 405.45 410.45
TATA IRON AND STEEL CO. LTD. 416.00 422.80 415.75 418.35
RELIANCE* 563.00 573.80 561.10 567.05
ONG CORP LTD 851.00 868.40 851.00 860.95
RELIANCE ENR* 558.00 558.00 530.00 535.95
HINDUSTAN LEVER LTD. 135.00 136.00 133.65 135.00
TATA MOTORS 419.45 422.60 413.25 417.40
STATE BANK OF INDIA 672.00 677.90 659.25 666.00
BHARTI TELE 212.00 215.00 209.00 210.55
GRASIM INDUSTRIES LTD. 1,254.00 1,254.00 1,190.50 1,212.85
BHEL 790.00 790.00 767.00 773.35
BAJAJ AUTO 1,021.00 1,042.00 1,010.00 1,018.20
WIPRO LTD. 655.00 662.00 636.15 644.45
HINDALCO IN 1,319.00 1,330.00 1,295.00 1,309.80
HEROHONDA M 545.00 546.00 538.50 541.45
HINDUSTAN PETROLEUM CORP. LTD. 314.25 317.00 308.60 310.75
I T C LTD 1,334.90 1,335.00 1,307.20 1,319.50
ASSOCIATED CEMENT COMPANIES LT 362.80 362.80 358.10 358.75
Last Update : 28 March, 2005, 16:05PM

S&P CNX Nifty
SymbolOpenHighLowLast Price
RELIANCE 562.00 573.30 561.50 566.10
TISCO 415.25 422.90 415.00 418.30
SBIN 679.00 679.00 659.10 665.60
SATYAMCOMP 390.00 406.70 389.05 399.35
INFOSYSTCH 2175.00 2216.95 2167.00 2186.00
ONGC 851.05 869.85 851.05 861.90
MARUTI 412.00 430.85 412.00 421.20
PNB 400.10 416.50 400.00 405.25
TATAMOTORS 419.80 423.00 413.15 417.95
SAIL 64.40 65.60 64.25 64.75
TCS 1391.00 1408.85 1384.00 1392.40
WIPRO 650.00 662.65 635.00 643.20
M&M 487.90 490.90 474.10 479.50
BHEL 799.00 799.00 765.10 772.70
RANBAXY 1057.00 1085.40 1055.00 1072.90
ITC 1330.00 1345.80 1306.60 1313.65
ACC 369.80 369.80 357.80 358.45
HDFC 697.00 713.00 692.10 708.85
DRREDDY 770.10 778.00 757.10 772.55
ICICIBANK 393.80 400.00 393.80 397.85
HINDPETRO 313.70 316.90 307.10 310.70
GAIL 219.15 222.40 218.00 219.70
TATAPOWER 345.00 356.90 342.05 352.30
IPCL 169.50 170.70 168.75 170.05
BHARTI 212.50 214.55 208.75 210.00
HINDLEVER 134.00 136.35 133.50 134.85
MTNL 121.75 123.00 116.80 117.20
HINDALC0 1313.50 1339.95 1295.00 1304.90
GRASIM 1249.45 1249.45 1184.35 1206.20
LT 1027.00 1027.00 980.00 1006.05
BPCL 377.00 378.00 359.10 365.30
CIPLA 258.40 259.70 255.00 257.15
BAJAJAUTO 1010.00 1042.00 1010.00 1021.50
GUJAMBCEM 405.00 412.80 405.00 410.20
HCLTECH 349.00 356.95 346.15 351.90
ORIENTBANK 317.00 318.40 313.00 315.00
REL 540.00 542.90 534.00 536.15
ZEETELE 131.50 135.00 131.00 134.15
TATACHEM 147.25 149.70 142.00 142.90
HDFCBANK 529.00 539.80 526.45 532.95
SCI 153.00 157.00 151.85 156.35
HEROHONDA 540.95 548.00 538.05 540.70
NATIONALUM 175.90 175.90 171.00 172.25
TATATEA 510.10 522.00 505.00 519.10
VSNL 189.90 189.90 178.45 180.65
DABUR 110.00 113.50 109.00 109.85
GLAXO 701.50 703.50 689.00 695.30
SUNPHARMA 473.55 474.00 467.20 470.25
ABB 1130.00 1174.00 1121.00 1144.25
COLGATE 178.00 179.50 169.05 169.80
Last Update : 28 March, 2005, 16:04PM

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Indices bounce back