The large fall in US markets yesterday and weakness in some of the Asian markets today morning pushed Indian markets downwards in early trades. After losing close to a percent on the Sensex, the markets recovered and gained strength gradually.

Buyers returned to the market as Satyam Computers announced better than expected results for the last quarter ended March 2005. Investors took comfort from the steady outlook given by the company and the stock closed with gains of over 5 per cent.

All round buying pushed up the indices and smart recovery in some of the banking stocks towards closing helped the markets to end the day with good gains. Sensex closed at 6299, up 55 points and the Nifty at 1949, up 19 points. Nifty April futures discount to the spot index widened to 7 points from yesterday's 4 points.

Among Nifty stocks, Satyam, Sun Pharma and BHEL were the major percentage gainers while Zee Tele, MTNL and Colgate were the major losers.

US markets declined further yesterday after showing signs of stabilizing over the previous two sessions. Both Dow and NASDAQ indices lost a per cent each. Investors are worried about growth in consumer demand as consumer prices are inching up. Fears of inflation have dampened the positive sentiments from better than expected corporate results.

Crude futures for May delivery gained further yesterday on worries of declining US inventory of refined products. Chinese crude oil imports data for the month of March, which rose over 23 per cent as compared to last year, gave further strength to the market. Crude closed at $52.44 to a barrel.

Inflation for the week ended 9 April rose to 5.48 per cent as compared to 5.26 per cent for the previous week.

For the fourth quarter Satyam has reported an 18 per cent jump in profits compared to the previous quarter as revenues rose by 9 per cent. The company has projected a revenue growth of 26 to 28 per cent for the current year and total revenues may touch the $1 billion mark. Satyam is acquiring a 75 per cent stake in UK based Citisoft, which is a software consulting company in the financial space, for over 20 million pounds.

For the first quarter of the current year, Satyam expects profits to decline around 8 per cent as compared to the last quarter ended March. This is on account of salary hikes for employees, effective from 1 April. The acquired company, Citisoft, has a lower operating margin as compared to Satyam and margins for the current year would be lower on a consolidated basis.

On the positive side, Satyam has considerably reduced the dependency on its largest customer General Electric. The company says so far it has not faced any slow down in new business because of the preoccupation of US companies with financial regulations. Other software majors had cited this as a reason for their muted guidance. If fact, Satyam says it is receiving a price hike of 3 to 4 per cent on fresh orders.

As reported yesterday, Tata Steel is planning to acquire management control over a steel plant in Iran. The company has sent a team of executives to evaluate the 3 million tonnes per annum plant. The target facility, currently government owned, has its own captive mines for iron ore. Tata Steel is negotiating a contract to manage the plant and to take over ownership at a later stage.

The Tata Group has made a formal proposal to the government of Bangladesh involving investments of $2.5 billion. The proposal includes 2.4 million tonnes per annum steel plant by Tata Steel. A fertilizer plant by Tata Chemicals and a power plant by Tata Power are also part of the proposal.

The International Iron and Steel Institute have forecast global consumption of steel to cross 1 billion tonnes for the first time ever in the current year. It projects a consumption growth of over 6 per cent in India for the next 2 years, which would place the country as the third fastest growing market after China and Brazil.

Engineering major Siemens was one of the biggest gainers among frontline stocks. The news of a major order win worth Rs147 crore from Powergrid Corporation came after the markets closed. Obviously, a section of the market had inkling about the news.

Nalco firmed up in morning trades as the company announced a 60 per cent jump in profits for the first quarter ended March 2005 as compared to last year. The company's results are reflective of the firm trend in aluminium prices during the last quarter. International aluminium prices have stabilized after the recent fall.

TCS staged a mild recovery after losing over 15 per cent in the last 2 trading sessions. The stock closed with gains of over 2 per cent. Wipro, which is set to announce its results tomorrow, closed with gains after trading weak till afternoon. Infosys closed flat after a weak morning session.

Mid-cap action

Corporation Bank, which announced its results during the day, was the star performer with gains of 10 per cent. Even though profits for the year ended March 2005 have declined as compared to last year, the bank has reported a healthy increase in net interest income. Advances have grown 33 per cent over the previous year and the interest spread for the bank is close to 4 per cent.

UTI Bank has reported a 34 per cent jump in profit for the quarter ended March 2005 as compared to the previous year. The net interest income has increased by 20 per cent.

Backed by encouraging results, most mid-cap banks had a good session today. The BSE Bank stocks index gained close to a per cent as many bank stocks recovered from their early losses.

Jindal Stainless reported more than 50 per cent rise in profits for the year ended March 2005 as compared to the previous year. The company says it is less prone to cyclical changes in the market as its products have high value addition.

KEC International has won a large contract from Ethiopian Electric Corporation worth $53 million. The order is for construction of power transmission lines and base stations in that country. The stock gained 10 per cent in early trades.

Pantaloon Retail gained smartly as Shopper's Stop, one of its competitors, announced details of its IPO. The Shopper's Stop IPO will be priced between Rs210 and Rs250 and will open shortly. The pricing is somewhat aggressive as the company has earned under Rs7 per share for fiscal 2005.

Among mid-cap stocks Shreyas Shipping, Helios and Matheson, Gujarat Flouro and Zodiac Clothing were the significant percentage gainers.

Eastern Silk, Salora International and NIIT Technologies were among the major mid-cap losers.

*Disclaimer: The author does not 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