Indices decline from early highs and close marginally lower

Indices opened on a firm note and within minutes went on to add more than half a per cent each. Short covering ahead of the derivatives settlement tomorrow led to gains for many frontline stocks which held the market at higher levels.

Selling pressure emerged soon after and the indices lost most of their gains and trades in a sideways director till around noon. A couple of results which were below expectations led to a sharp sell off in early afternoon trades and both frontline indices declined close to half a per cent each.

The last one hour saw some fresh short covering and the indices climbed back into positive territory. The trend did not last and the markets declined once again towards close.

Ranbaxy, which had declined continuously for more than 12 days to one-year lows, was the biggest gainer among index stocks. After opening strong, the stock maintained the up trend throughout the session and closed more than 4 per cent higher.

Other pharma stocks like Cipla and Glaxo were also among the gainers. After gaining close to 2 per cent in early trades, Dr. Reddy's declined and closed 2 per cent lower.

Banking stocks had a mixed day as the markets digested the credit policy announced yesterday. ICICI Bank added well over a per cent. SBI and HDFC Bank closed marginally lower. HDFC added close to 2 per cent following encouraging results announced yesterday.

Bharti Televentures and Grasim were the other significant gainers among index stocks.

Steel stocks continued to decline as SAIL lost another 4 per cent. Tata Steel declined a per cent in late trades after the company announced results which were below expectations. Smaller steel stocks like Ispat Indstries declined substantially.

Auto stocks were also among major losers, led by Tata Motors. The stock declined close to 4 per cent as the results declared yesterday were less than encouraging. Maruti lost close to 2 per cent while M&M closed with gains. Among the 2-wheeler stocks, both Hero Honda and Bajaj Auto lost well over a per cent each.

Technology stocks had a weak session as all the frontline technology stocks declined. HCL Tech, which had seen good appreciation yesterday, gave up all the gains and closed 4 per cent lower.

TCS lost well over a per cent while Infosys declined by half a per cent. Wipro and Satyam also closed with losses.

Sensex closed at 7975, a loss of 17 points, and the Nifty at 2408, lower by 10 points. Nifty October futures closed at a premium of 7 points to the spot index.

Ranbaxy, Grasim and Bharti were the major gainers among Nifty stocks while Tata Motors, Tata Power and SAIL were the major losers.

US markets closed lower even after making a recovery from a mid-afternoon slump. An unexpected drop in consumer confidence for the month of October, ahead of the holiday season, was enough to cause more worries in an already weak market. The year end holiday season is traditionally the best period for most companies and weak demand could have a significant impact on corporate performance. The sharp bounce back in crude oil also affected the sentiment.

The Dow lost less than one tenth of a per cent and S&P 500 index closed a quarter of a per cent lower. Losses on the NASDAQ were higher at close to a third of a per cent.

Crude oil futures for December delivery bounced back yesterday as cooler than normal weather conditions in many parts of the US led to expectations of an early winter and higher oil demand. Oil futures closed the day $62.44 per barrel, higher by $2.12 or more than 3 per cent. Crude oil futures are trading lower at around $62 per barrel in early European trades today.

ONGC has reported better than expected profits for the quarter ended September. Consolidated net profits for the quarter rose 22 per cent to Rs4,138 crore as against Rs3,384 crore during the same quarter of previous year. Total income for the quarter at Rs13,543 crore was 10 per cent higher than Rs12,289 crore reported during the previous year quarter.

Tata Steel has reported a 12 per cent rise in consolidated profits to Rs1,111 crore as against Rs990 crore during the previous year quarter. Consolidated revenues for the quarter were at Rs5,123 crore as against Rs4,085 crore. Growth in stand alone revenues at 3 per cent was lower than expected. Standalone revenues for the quarter were at Rs3,984 crore as against Rs3,795 crore.

Mahindra & Mahindra has reported a net profit of Rs157 crore for the quarter ended September as against Rs123 crore during the previous year quarter. Total revenues were higher by 22 per cent at Rs1,944 crore as against Rs1,592 crore.

Mahindra and Mahindra Financial Services, a subsidiary of M&M, would come out with an IPO shortly. The initial offer would also include an offer for sale from M&M. The company is planning to sell 1 crore equity shares or a 14 per cent stake in MMFS.

Diversified Birla group company Grasim declared a net profit of Rs200 crore for the second quarter, 7 per cent lower than the previous year quarter figure of Rs215 crore. Total revenues at Rs2,372 crore was higher by 5 per cent as compared to Rs2,260 crore during the previous year quarter.

According to media reports, Tata Motors management has stated that the company is planning to launch the mini car, popularly dubbed as the Rs1 lakh car, by the year 2008. The company would set up a centralised engine production unit and multiple assembling unit for the vehicle and is targeting annual sales of around a million units. The company would invest close to Rs6,000 crore over the next few years for the project.

Asian Paints has reported a consolidated net profit of Rs59 crore for trhe quarter ended September as against Rs49 crore during the previous year quarter. Total revenues for the quarter were higher at Rs780 crore as compared to Rs680 crore. The figures are not strictly comparable as the company had sold off 2 overseas subsidiaries in the current year.

HDFC would form a joint venture with private equity firm W L Ross to finance bankrupt companies and purchase of stressed assets. HDFC would hold a close to 20 per cent stake in the venture.

Mid-Cap Action

Mid-caps remained subdued for most of the day though they managed to trade with gains till afternoon. The losses were however lower than those of frontline stocks. The CNX Mid-Cap index lost 11 points and closed the day at 3536.

The promoters of printing ink manufacturer Micro Inks has signed an agreement with Huber of Germany to sell a majority stake in the Indian company. As per the agreement Huber would acquire 50.5 per cent stake currently held by the promoters of Micro Inks, to be followed by an open offer for an additional 20 per cent from the public. The acquisition has been made at Rs675 per share which values the company at over Rs1,600 crore.

Huber would acquire an additional 8 per cent from the promoters depending on the response to the open offer. The final shareholding of Huber would be limited to 70.5 per cent. The promoters of Mirco Inks would continue to be associated with the company and would also take a 46 per cent stake in an European subsidiary of Huber.

Electricity utility CESC has declared a 10 per cent increase in second quarter profits at Rs57 crore. Total revenues for the quarter were higher at Rs688 crore as compared to Rs600 crore during the previous year quarter.