Indices correct after touching new highs

Markets opened the day with a positive gap and the indices touched new highs in early trades. Sensex touched the 7300-mark for the first time today.

News of the terrorist attack in Ayodhya led to some nervousness and the indices gave up most of the early gains. Later reports that the attack had been foiled helped the markets recover and the indices were trading in positive territory by early afternoon.

Reports of nation-wide protests being planned tomorrow by the opposition political parties led to operators covering their positions which led to weakness in the markets.

Weakness in technology, oil and some FMCG stocks saw the indices declining sharply and losing ground fast. The last half hour saw some consolidation at the lows of the day.

Sensex closed the day at 7220, down 57 points and the Nifty at 2211, down 20 points. Nifty July futures discount to the spot index widened to 14 points from yesterday's 4 points.

Among Nifty stocks, ABB, Tata Motors and Zee Tele were the major percentage gainers while Glaxo, VSNL and HCL Technologies were the major losers.

US stock and commodity markets remained closed yesterday for Independence Day.

Foreign brokerage CLSA considers India to be the best equity story in Asia for the next few years. The brokerage expects Chinese growth to decline considerably during the current year, which will affect most other Asian economies. India will remain mostly unaffected.

Some of the stocks recommended by CLSA as their top picks saw considerable appreciation today. Tata Motors which gained close to 4 per cent and Jet Airways which gained close to 2 per cent were among them.

There are reports that Reliance Industries may agree to share part of the subsidy burden of PSU oil marketing companies. Till last financial year, Reliance had voluntarily offered lower prices on refined products bought by marketing companies. The stock closed a per cent lower.

Oil marketing companies are believed to have made losses during the first quarter of current year as crude prices hit record highs. At present, only PSU companies like ONGC and GAIL share the subsidy costs on petroleum products with the marketing companies.

The board of Videocon Industries and Videocon International will meet on July 7 to discuss a merger. Videocon International is mostly into consumer electronics and appliances while Videocon Industries is focussing on oil and gas exploration.