Auto and technology stocks take the Sensex past 8700

Markets opened the day with gains and recovered from mild volatility in early trades. From then on, the indices maintained a steady up trend and closed the day at new lifetime highs.

Strong monthly sales figures from the auto stocks and buying in technology stocks ahead of earnings announcements led to good buying in frontline stocks. Except for banking, most sectors participated in the rally. The Sensex crossed the 8700 mark before noon and the index managed to close the day above that mark for the first time ever.

Auto stocks were the best performers today as good volume sales for the month of September attracted a lot of buying interest. Tata Motors added well over 3 per cent and Maruti rallied over 3 per cent. M&M and Ashok Leyland also closed with strong gains.

Among the two-wheeler stocks, Bajaj Auto closed more than 4 per cent higher at a new 52-week high. TVS Motors also closed at a new yearly high, with gains of more than 7 per cent. Hero Honda was more subdued and closed about a per cent higher.

Technology stocks led by Satyam closed the day with strong gains. Satyam added well over 2 per cent while Infosys added one and a half per cent. Wipro added 2 per cent and TCS closed a per cent higher.

Heavy buying was seen in the stock of natural gas company GAIL in afternoon trades. The stock closed more than 6 per cent higher.

HLL was another major gainer among large caps, closing almost 3 per cent higher. Dabur and Colgate were the other two FMCG stocks closing with strong gains.

Buying continued in Dr. Reddy's, which closed more than 3 per cent higher. Ranbaxy added close to 2 per cent.

Refinery stocks like MRPL and Chennai Petroleum saw significant appreciation. MRPL closed with gains of close to 4 per cent while Chennai Petroleum added close to 5 per cent.

Private banking stocks turned weak in afternoon trades and put some pressure on frontline indices. ICICI Bank closed well over a per cent down while HDFC Bank also lost more than a per cent.

HDFC was the biggest loser in this sector, closing 2 per cent down.
Among PSU Banks, SBI added more than half a per cent while PNB gained well over a per cent.

Sensex closed at 8709, a gain of 74 points, and the Nifty at 2630, higher by 29 points. Nifty October futures closed at a discount of 3 points to the spot index.

GAIL, Tata Chemicals and IPCL were the biggest gainers among Nifty stocks while HDFC, Sunpharma and ICICI Bank were the major losers.

Utility vehicles major Mahindra & Mahindra is close to acquiring engineering services companies in the US, Germany and India. The management said negotiations are at an advanced stage and an announcement can be expected within a few weeks. The company is planning to quadruple revenues from auto components and engineering services business to $1 billion by the year 2010.

M&M is also planning to launch new variants on the successful Scorpio SUV platform. The Scorpio model was launched three years ago and is a market leader in its price segment. The model is also exported to a number of countries.

Meanwhile M&M has reported a marginal 2 per cent rise in monthly sales volume, except tractors, for September. Strong growth in SUV sales compensated for the decline in UV and 3-wheeler sales during the month. Tractor sales rose an impressive 30 per cent during the month to over 7,000 units.

Engineering major L&T is planning to set up a new centre to manufacture marine structures at an investment of Rs500 crore. The company is currently evaluating various locations across the country for establishing the centre which would fabricate marine structures like oil platforms and drilling rigs. The facility would be the company's sixth manufacturing growth centre. L&T inaugurated its fifth centre in Coimbatore over the weekend, which would focus on manufacture of precision tools, valves etc. The stock closed marginally higher.

SAIL is planning to in increase its capital outlay over the next seven years by Rs10,000 crore to Rs35,000 crore. The investment would be made in capacity expansion at its various steel mills, facilities for value added products and expansion of IISCO which was acquired by SAIL. The company has reduced the prices of certain products by up to 4 per cent. The stock closed with gains of close to 2 per cent.

Maruti Udyog has reported an increase of 12 per cent in sales volumes for the month of September as compared to the same month of previous year. Domestic sales reported an impressive 15 per cent rise, helped by a 35 per cent rise in premium hatchback volumes. Export sales were lower by 20 per cent. The company has announced a marginal increase in prices from this month and said another hike may be considered by the end of the year.

Helped by strong volume growth in the motorcycles segment, Bajaj Auto has reported a 33-per cent increase in volume sales for the month of September. Total monthly sales, two and three-wheelers combined, crossed the 200,000 mark for the first time in the company's history. The company sold more than 180,000 motorcycles during the month, an increase of more than 43 per cent as compared to the same month of previous year.

TVS Motors reported a 27-per cent rise in volume sales for the month of September. This is the best monthly performance of the company. The stock rallied close to 8 per cent to close at a new yearly high.

News agencies have reported that the second quarter volume sales of Tata Steel were higher by 14 per cent as compared to the same quarter of previous year. Production increased by 15 per cent during the quarter. The stock added half a per cent.

Mid-Cap Action

Mid-caps bounced back strongly and outperformed the frontline indices by a good margin. Traders were back in action as many momentum stocks closed the day with significant gains. Small caps on the BSE also managed a recovery and the small-cap index closed with gains of over 2 per cent. The CNX Mid-Cap index added 54 points and closed the day at 3861.

Media reports indicate that the merger talk between Federal Bank and Lord Krishna Bank are held up on differences in valuation. The LKP shareholders have reportedly asked for a valuation of Rs450 crore, while Federal Bank is not willing to go beyond Rs300 crore. Both banks are based in Kerala and the merger would expand Federal Bank's balance sheet size by around 15 per cent. Neither bank has confirmed the reports and even if the reported negotiations are successful, the merger would be subject to RBI approval.

Radico Khaitan, the second largest liquor company in the country, has acquired the Maharashtra based Brihan's liquor brands. The acquired portfolio includes the popular Napoleon brandy. The acquisition would add volumes of 1-million cases per annum to Radico's current sales of 12 million cases.

Welspun Gujarat Stahl Rohren has received a new order from Indonesia for supply of coated pipes for a natural gas pipeline project. The order is reportedly worth Rs500 crore and will be executed during the first half calendar year 2006.