Markets stage a swift bounce back

The markets opened on a firm note on positive global cues including a firm closing by the US markets and a decline in crude prices. The rate hike by US Fed was also on expected lines and helped to lessen fears about future FII inflows into the country.

The surge was across the board, except for the PSU oil marketing companies, which were trading with losses of over a per cent each early in the morning.

After remaining within a range with a positive bias till late in the afternoon, the indices surged sharply as technology and banking stocks notched up handsome gains. Oil stocks recovered from their morning weakness and added to the market momentum.

The indices regained most of the past two days' losses in today's session. The Sensex and Nifty are back to last week's closing levels.

Sensex closed at 7730, a gain of 134 points, and the Nifty at 2360, a gain of 41 points. Nifty August futures closed the day a premium of 5 points to the spot index.

Satyam, SAIL and Bharti were among the major gainers among Nifty stocks while Bajaj Auto, Maruti and Gujarat Ambuja were the major losers.

US markets recovered yesterday after four days of losses as the US Fed raised short-term interest rates as expected by 25 basis points. The market rallied as the uncertainty over interest rates has passed, at least in the short term. The decline in oil prices later in the day also helped the indices.

The Dow and S&P 500 indices closed around three quarters of a per cent higher yesterday. Gains on the NASDAQ were lower at marginally less than half a per cent.

Crude oil futures for September delivery declined 87 cents during late trades yesterday after setting a new all time high above $64 to a barrel in early trades. Crude closed the day at $63.07 yesterday. The commodity has opened firm in early European trades today.

Indian ADR's recovered partly from Monday's losses, yesterday. The recovery was led by ICICI Bank and HDFC Bank with the former closing with gains of nearly 4 per cent and the latter closing 3 per cent higher. Technology ADR's also had a good day led by Infosys and Satyam, which gained close to 2 per cent each. Wipro also managed to close with gains. VSNL continued its downtrend, losing another 2 per cent yesterday. Dr. Reddy's was the other loser, closing over half a per cent lower.

The ministry of petroleum has indicated that all the four PSU oil-marketing companies would become sick units under the BIFR norms, if fuel prices are not increased. These companies would erode their networth as losses are mounting because of under recoveries.

IBP's net worth would turn negative within the next two months followed by BPCL and HPCL, which will turn sick next year. Even Indian Oil would turn sick in another three years if the present scenario continues.

Oil PSU stocks opened the day on a weak note but recovered later as the markets gathered strength. HPCL led the recovery and closed the day with gains of well over 3 per cent. BPCL closed the day with gains of nearly 3 per cent while Indian Oil closed 2 per cent higher. ONGC was the sole loser among PSU oil stocks.

Tata Motors has indicated that the much talked about Rs1-lakh passenger car would be launched between 2007 and 2008. The company is ready to go in for tooling for the car and is expected to deploy innovative manufacturing techniques to keep costs down. The stock closed 2 per cent higher.

Tata Tea has confirmed that the company is looking for acquisition opportunities, either of brands or mid-sized companies, in north or South America. The size of the deal could be as high as $1 billion and the company has reportedly set aside Rs500 crore for this purpose. The stock closed over 3 per cent higher.

Sun Pharmaceuticals has acquired a stake in Hungary-based ICN from a US pharmaceutical company Valeant. The Hungarian company manufactures raw materials and offers Sun a ready entry into the European generics market. The stock closed 3 per cent higher.

Bharti TeleVentures gained over 4 per cent on healthy subscriber additions during the month of July. The company added over five lakh new customers during the month, the highest by any telecom operator.

Technology stocks surged ahead led by Satyam Computers, which gained over 5 per cent. TCS and Infosys gained over to 2 per cent each while Wipro gained well over a per cent.

TCS announced a strategic tie-up with BindView, an international provider of technology security solutions.

Metal stocks had a good day led by SAIL, which closed with gains of over 4 per cent. Tata Steel closed almost 3 per cent higher while Hindalco gained 2 per cent. Among the smaller steel stocks, Essar Steel, Ispat Industries and JSW Steel all closed with gains.

Maruti and Bajaj Auto were among the losers today closing the day with losses of over a per cent each.

Mid-Cap Action

Mid-caps also bounced back smartly on frenzied buying in most of the actively traded counters. Market breadth was also highly positive. The CNX Mid-Cap 100 index closed the day at 3559, a gain of 66 points or close to 2 per cent.

The UB Group would merge all its liquor businesses under UB Spirits, including the businesses acquired by the group from Shaw Wallace. The process would be completed by March of next year and the merged company would be listed subsequently.

Travel company Thomas Cook denied media reports that its parent company is planning to sell its stake in the company. The reports mentioned that Kotak Mahindra Capital has been given the mandate to sell the 60 per cent stake held by the parent company in Thomas Cook India.

Two-wheeler manufacturer LML expects to return to profitability in the last quarter of the current year. The company had been posting losses for the last three years as scooter sales dropped substantially. The company expects motorcycle sales to pick up and has launched many models recently.

Ingersoll Rand was locked in the 20 per cent upper circuit after its US parent announced that it would acquire the outstanding public holding in the company through a reverse book building process. The parent holds 74 per cent stake at present.