Sensex back above 7800 as markets continue to rally

Markets opened the day marginally lower but recovered soon. The indices remained sideways for almost an hour as the markets searched for a clear direction. Global cues were weak as US markets had closed lower yesterday and crude oil set yet another record.

Buying emerged before noon and the indices started a steady up trend, which lasted for the rest of the day. Buying continued in technology stocks led by Wipro, TCS and Satyam Computers, all of which gained well over a per cent each.

Sensex crossed the 7800 mark once again by late afternoon trades and the Nifty inched towards the 2400 levels. The last half hour saw some selling but the indices recovered and closed the day near the day's highs.

Sensex closed at 7805, a gain of 60 points, and the Nifty at 2385, a gain of 17 points. Nifty September futures closed at a discount of 24 points to the spot index.

Tata Power, Bajaj Auto and Zee Tele were the biggest gainers on the Nifty while SAIL, Tata Motors and HDFC Bank were the major losers.

US markets lost all of the gains from the previous day as the indices closed lower yesterday. The markets were edgy on fresh reports of widespread damages caused by the hurricane and high loss of life. Possible insurance claims alone are expected to be in the range of $25 to $30 billion as the storm moved to other areas.

The Dow lost close to half a per cent while the NASDAQ and S&P 500 closed with losses of over one third of a per cent each.
Crude futures for October delivery bounced back sharply and set an all-time high of $70.85 per barrel yesterday before closing at $69.81. Reports of major damages to oil rigs in the Gulf of Mexico, with some of them drifting, sent oil futures higher.

The hurricane has led to a temporary disruption of crude production and refining in the US. Crude futures are trading higher at $70.5 in early European trades today.

Most of the Indian ADR's held on to their gains from the previous day even as the markets were weak yesterday. MTNL continued its strong showing, gaining another two per cent while VSNL closed with marginal gains. ICICI Bank closed more than a per cent higher while HDFC Bank closed marginally higher.

Technology ADR's had a bad day with Wipro closing more than 2 per cent lower while Infosys lost half a per cent. Satyam managed to close with gains. Tata Motors closed marginally lower while Dr. Reddy's ended the day with marginal gains.

Mahindra & Mahindra will set up an integrated research facility either at Pune or Chennai at a cost of over Rs400 crore. The company is planning to shift all its research and test facilities to one location. The proposed facility will have test tracks and crash test facilities apart from design and engineering. The stock closed a per cent higher.

As per media reports, Tata Steel has initiated talks with the government to acquire some of the coalfields of loss making PSU Bharat Coking Coal. The reports further indicate that the government is willing to lease out the coalmines to private companies though the PSU itself will not be privatised. The stock closed marginally lower.

Hitachi Construction of Japan is planning to raise its stake in Telco Construction, a subsidiary of Tata Motors. Telco Construction offers a range of construction equipment under technical collaboration with Hitachi and is the market leader with over 50 per cent share. The JV would introduce more models in the domestic market in future. The stock lost over a per cent.

Indian Oil would submit its bid for Turkish refiner Tupras this week. The company is bidding along with a Turkish partner for 66 per cent in Tupras being sold by the Turkish government. If successful, Indian Oil would hold 51 per cent stake in Tupras, which has a refining capacity of 30 million tonnes of crude per annum.

SBI is considering various options to retain at least a part of the India Millennium Deposits, which are due for redemption in December. The scheme had raised over $5 billion and the total amount due, including interest, is close to $7 billion. Among the options being considered is an India dedicated offshore equity fund. The stock gained over a per cent.

After outbidding ONGC-Mittal combine to buy Petro Kazakhstan, Chinese oil major CNPC is planning to team up with ONGC for overseas projects. According to media reports, CNPC has stated that it is currently in discussions with ONGC regarding a specific project. The stock closed higher.

ONGC is also one of the bidders for some of the exploration blocks and refining projects in Ecuador. The blocks on offer reportedly hold very good potential and would involve investment of $2.5 billion. ONGC's subsidiary OVL had won 25 per cent stakes in two deep-water exploration blocks in Nigeria yesterday.
Speculation about a merger between and TCS and its subsidiary CMC has resurfaced, which have been taken up by the print media as well. TCS denied all such reports. The stock closed more than a per cent higher.

Mid-Cap Action

Mid-caps also started the day on an indifferent note but gained strength before noon and maintained a steady up trend for the rest of the session. Gains on the mid-cap index were higher than the frontline indices. The CNX Mid-Cap index closed the day at 3663, a gain of 33 points.

GE Shipping formally announced the de-merger of the offshore services division into a separate company. Existing shareholders of GE Shipping would get shares in the new company on a proportionate basis as per the scheme being worked out by Kotak Bank. The stock closed more than a per cent higher.

The offshore services division provides drilling services, marine construction and port services and contributed less than 20 per cent of last year's profits. The GE Shipping management has confirmed that the share capital of the company would be reduced during the process of de-merger.

Aurobindo Pharma will set up a wholly owned subsidiary in South Africa to address the increasing demand for generic anti-aids drugs in that country.

Mid-cap pharma company JB Chemicals is reportedly in negotiations to acquire drug formulation and pharma packaging companies in Russia. The company already has a large presence in the Russian and the former CIS markets. According to these reports the target companies could be as big as JB Chemicals itself and the deal size could be in excess of Rs350 crore.