Sensex cross 8700 before giving up part of the gains

The indices opened the day with a large positive gap and went on to record new lifetime highs in morning trades. The momentum from the last three days continued in many large cap stocks. The Sensex went past 8700 and was trading with gains of more than 100 points by early afternoon.

Profit booking emerged in afternoon trades as long positions were closed on the last day of the September derivative series. The indices declined steadily throughout the afternoon, though they managed to close with gains of half a per cent each.

Technology stocks, which were subdued during the early part of the week, led the rally in early trades. Infosys recorded gains of over 2 per cent. Satyam also saw considerable buying interest. TCS gained over a per cent by noon, before declining and closing with marginal gains.

ONGC continued its uptrend in the morning session, adding more than 2 per cent to post a new lifetime high today, though it faced selling pressure in late trades and closed with gains of half a per cent.

Reliance Industries managed to maintain the uptrend today as well and closed at a new lifetime high, with gains of close to a per cent.

Frontline cement counters also attracted a lot of buying, which sustained through most of the day. Gujarat Ambuja was trading with gains of almost 4 per cent by noon and closed the day more than 2 per cent up. ACC gained over a per cent.

HPCL and BPCL declined today on profit booking after yesterday's strong gains. Indian Oil, though, managed to close with gains.

Banking stocks were weak during the session. ICICI Bank turned weak after RBI banned further FII purchases in the stock and lost more than a per cent in afternoon trades before recovering and closing flat. HDFC Bank also closed flat, while HDFC lost more than a per cent.

The Sensex closed at 8650, a gain of 44 points, and the Nifty at 2511, up by 13 points. Nifty October futures closed at a discount of 7 points to the spot index.

BHEL, Cipla and L&T were the biggest gainers among Nifty stocks while Ranbaxy, VSNL and MTNL were the major losers.

The US markets gave up early gains as crude oil surged in late afternoon trades. Stocks had firmed up in early trades on reports of a robust growth in durable orders, a measure of business demand, for the month of August. Higher crude prices brought back worries about the impact of higher fuel costs on corporate profitability later in the day. The Dow and S&P 500 closed with gains of around a tenth of a per cent. The NASDAQ closed marginally lower after a sharp decline in the shares of Apple Inc.

Indian ADRs had a mixed day on the US exchanges yesterday. ICICI Bank and VSNL were the biggest losers, closing lower by 2 per cent each. Tata Motors lost close to a per cent while MTNL closed with marginal losses. HDFC Bank added close to a per cent and Dr Reddy's closed with marginal gains. Tata Motors gained more than 3 per cent.

Technology ADRs continued to run up yesterday as well. Infosys and Satyam closed with gains of over a per cent each while Wipro added close to half a per cent.

Crude oil prices rose after the weekly US inventory data showed a decline in crude stocks. Traders expect the situation to worsen after the production losses due to Hurricane Rita are accounted.

Crude oil futures for November delivery closed at $66.35, more than 2 per cent higher from the previous day's close, on the NYMEX yesterday. The commodity is trading flat in early European trades today.

Dr Reddy's has entered into a 10-year development and clinical research agreement with a Denmark-based company for its new diabetic drug. The company had earlier signed a licensing agreement for the same molecule with Novo Nordisk, which was cancelled subsequently. Dr Reddy's will share part of the development costs, while the Danish company will bear the complete costs for clinical trials.

Dr Reddy's said the new molecule holds good promise and, if successful, could bring in significant revenue flows. The marketing rights of the new drug for the EU and Chinese markets would be held by the Danish company while Dr Reddy's would hold the rights for the rest of the world. The company had announced yesterday that it would transfer four other new molecules to a newly launched research company with equity participation from private equity firms. Dr Reddy's closed the day with gains of more than 3 per cent.

Ranbaxy Laboratories has received US FDA approval for manufacturing and marketing of a drug used for treating respiratory problems. The stock closed lower by more than 2 per cent.

TCS has opened a new development facility in Delhi. The facility would act as an innovation lab and would focus on emerging technologies. The company said increasing demand for outsourced services would protect margins in the foreseeable future.

Jet Airways said it is hopeful of receiving the approval from US authorities to start services to the US by October. The airline is planning to launch a daily service by end-October. Jet could not launch the service earlier, after a US company with the same name filed a complaint against the airline. The stock lost more than a per cent.

The government has approved Shipping Corporation of India's plans to acquire two very large crude carriers. Each of these vessels would cost close to $130 million. The stock closed with marginal losses.

The government has awarded an oil exploration block in Arunachal Pradesh to a consortium led by NTPC under NELP-5. GAIL India is a minority partner in a consortium that was awarded a block in Assam.

ONGC Videsh has been awarded an exploration block in Vietnam. The company would have 100 per cent participating interest in the block.

Capital goods stocks saw considerable buying interest in today's trades. BHEL was one of the major gainers after the company management said top and bottom line growth would be healthy over the next few years. The company also said it has received export orders worth close to Rs1,200 crore so far during this financial year. BHEL added over 5 per cent in today's trade. L&T also gained close to 5 per cent while ABB closed higher.

Mid-Cap Action

Mid-caps lost steam in afternoon trades and declined. Many of the momentum stocks were heavy losers and the market breadth was negative. Small caps on the BSE were worse off with a large number of stocks in the lower circuit. The CNX mid-cap index lost 14 points and closed the day at 3813, a loss of more than a third of a per cent. The BSE small cap index lost close to 2 per cent.

According to news agency reports quoting the Hinduja group, IndusInd Bank is to launch a $1 billion infrastructure fund. The fund would target overseas investors and NRIs, and the money would be invested in infrastructure projects within the country.

Software company Helios and Matheson will invest Rs75 crore over the next three years to open new development centres. According to a statement issued to the exchanges, the company will set up the facilities in cities like Coimbatore in Tamil Nadu.

The board of directors of Hindustan Construction has approved a stock split in the ratio of 10 shares of face value Re1 for every Rs10 share held, subject to shareholder approval. The stock had been on an upswing for the last few days and closed the day with gains of close to 10 per cent.

JB Chemicals has received final US FDA approval to manufacture and market a new drug for the treatment of meningitis and other diseases.