Uptrend Halted on Profit booking

After five days of continued up move, market saw some profit booking today. After opening firm in the morning, the indices drifted down by noon on broad based selling. The indices however managed to recover part of the lost ground towards close. Sensex closed at 6892, down 22 points and the Nifty at 2161, a loss of 8 points. The Nifty futures discount to the spot index widened to 11 points.

Crude gained smartly on continued cold spell in the Western hemisphere and continue to seek record levels. US markets closed lower on concerns about oil prices and earnings downgrade by technology product companies. Among Indian ADR's ICICI Bank was a major loser with losses of more than 4 per cent. Investors dumped the stock in anticipation of the fresh ADR offer due to open shortly. HDFC Bank continued its rally while MTNL gained more than 2 per cent. Tech majors Infosys and Wipro ended in the red while Satyam closed unchanged.

Commodity markets continue to be on a roll worldwide. Copper, Aluminium and Zinc are all hitting new highs practically everyday. Gold rallied to a new high for calendar year 2005. Dollar weakness is adding to the continued bull run in commodities. Sugar, however, is trending lower on expectations of better output this year and good supply from Brazil. Sugar prices had firmed up in the global markets in anticipation of import demands from India, the world's largest consumer of sugar, which has not happened to the extent predicted.

Investment bank JM Morgan Stanley is holding a conference for potential foreign investors in Mumbai. The meet has received good response from overseas investors and Indian companies doing the presentations include Reliance, HDFC Bank and ICICI Bank. Domestic brokerage ICICI Securities conducted a similar exercise yesterday in Singapore. Brokerages, both domestic and foreign are aggressively selling the India growth story to foreigners and they seem to be lapping it up, going by the attendance.

There were unconfirmed reports of a possible merger between Reliance and IPCL. It may be recalled that Reliance had acquired a strategic stake in IPCL from the government a few years back. A merger between the two companies makes sense as they both operate in the petrochemicals business and a combined entity would be the dominant domestic petrochemicals player by far. However, Reliance Industries denied these reports later.

Reliance traded in positive territory throughout the day with the stock touching Rs600 after a one year gap in morning trades. It was widely reported in the media that a settlement is in sight between the Ambani brothers. ICICI Bank CEO K V Kamath, who is acting as a mediator in the dispute, is believed to have submitted a valuation report on the Reliance group holdings in various companies. It is said that this report would be the basis for an amicable settlement.