Late surge helps the indices to close with gains

The markets opened the settlement day for August derivatives in a tentative fashion. Global cues were negative with US markets trending closer to twomonth lows and oil prices at new highs.However, the Nifty remained above yesterday's closing levels though it was tested a couple of times in morning trades.

The indices remained very volatile within a range for most of the session. Every attempt at a rally was met with selling pressure at higher levels as the markets searched for direction.

Massive short covering in the last half-hour saw the indices rising rapidly in a matter of minutes. Heavy buying was seen in ONGC, BHEL, SAIL and VSNL.

The sensex closed at 7660, a gain of 48 points, and the Nifty at 2354, a gain of 32 points. Nifty September futures closed at a discount of 24 points to the spot index.

SAIL, VSNL and BHEL were the only stocks on the Nifty, which managed to close with marginal gains while BPCL, HDFC and Maruti were the major losers.

Record oil prices led to a slump in the US markets yesterday. After opening with gains on record sales of newly built houses, the major indices slipped as crude futures surged in the afternoon. A further downgrade of the bonds issued by Ford added to the negative sentiment.

The Dow lost over three quarters of a per cent while the S&P 500 closed two-thirds of a per cent lower. NASDAQ closed with losses of almost half-a-per cent.

Crude futures for October deliveries rose close to 3 per cent in intra-day trades to record a new lifetime high of $67.4 per barrel yesterday. A decline in US refined inventories as per the weekly data released yesterday and fresh warnings about fierce storms in the Gulf of Mexico led to the surge. The commodity closed with gains of over 2 per cent at $67.32 on the NYMEX yesterday.

Crude futures have set yet another lifetime high of $68 per barrel in opening Asian trades today before declining later in the day. The commodity is trading lower by half-a per cent below $67 in early European trades today.

Most Indian ADR's continued their down trend yesterday in the US markets. The banking stocks were once again among the worst hit. ICICI Bank lost well over a per cent while HDFC Bank lost over 2 per cent. MTNL and Dr Reddy's lost a per cent each while Tata Motors lost close to half-a-per cent.

VSNL recovered from the previous day's big fall and closed with gains of almost 2 per cent. Among the technology ADR's, Infosys managed to close a per cent higher while Wipro lost well over a per cent. Satyam closed with marginal losses.

BHEL has been awarded the contract to set up two power plants of 500mw each in Andhra Pradesh. The order from the state generation company is worth over Rs2,100 crore. BHEL closed with gains of close to 5 per cent.

Reliance Industries would raise $348 million in syndicated loans to repay higher cost debt. The issue has been fully underwritten by bankers to the issue and the initial response from lenders has been good. The stock closed with marginal gains.

UltraTech Cements, part of the Aditya Birla group, would invest Rs600 crore to expand the captive power generation units at its plants. Once the expansion is complete, the company is expected to save Rs110 crore per annum on lower electricity costs.

UltraTech will also invest Rs400 crore to improve production efficiencies and capacity utilisation. The company has ruled out any acquisitions in the near future. The stock closed with gains of over 4 per cent.

TCS has opened a new development centre at Chennai to service its clients in the insurance industry. The company expects to add 5,000 additional employees at Chennai during the current year out of a total of over 13,500 at all locations. The stock gained well over 2 per cent.

The US subsidiary of Ranbaxy has won the suppliers' award from one of the leading distributors of pharmaceutical products in the US. The stock closed with gains of over 3 per cent.

A committee of government secretaries has recommended the merger of Neelanchal Ispat with SAIL. Neelanchal is a PSU based in Orissa. SAIL closed the day with gains of close to 7 per cent, the biggest gainer among index stocks.

The government has informed the parliament that Shipping Corporation is planning to acquire 39 vessels in the next two years. The acquisitions will be funded mostly by internal accruals. The stock gained well over a per cent.

ING Vysya Bank has transferred its 14.87 per cent stake in ING Vysya Life Insurance to Gujarat Ambuja Cements after receiving the approval from regulatory authorities. The cement company had clarified that this is purely a financial investment. The stock closed with gains.

Housing finance major HDFC has launched its $500-million FCCB programme yesterday. The bonds are convertible into equity shares after five years at a price of Rs1,399 per share and carry no interest. The bonds would be listed on the Singapore stock exchange. The stock lost over a per cent today.

Mid-Cap Action

Mid-caps were less volatile than the frontline indices during the day. They built up strength in the morning session and sustained the uptrend for most of the day as many of the losers from the last few days bounced back in spectacular fashion. The CNX Mid-Cap index closed the day at 3549, a gains of 40 points.

The board of directors of Pantaloon Retail has approved a rights issue in the ratio of one share for every five shares held. The shares would be issued at Rs500 per share and the company would raise over Rs220 crore to fund its expansion plans.

The stock of Pantaloon was extremely volatile in today's session. By noon the stock had surged over 8 per cent, only to collapse later and close more than 3 per cent lower.

Private equity firm Barings has confirmed that it has dropped the plan to sell its 35-per cent stake in software company Mphasis BFL. Barings may look at unloading the stake through a GDR issue at a later date. Mphasis BFL lost over 5 per cent in today's trade.

Strong buying was seen in some of the mid-cap software companies today. Visual Soft led the pack with gains of close to 15 per cent. Rolta India, Aftek Infosys, Four Soft and 3i Infotech were the other major gainers.