Banking stocks help the indices to close with gains

Helped by the continuing strength across global markets, the indices opened the day with a positive gap and added more than half a per cent each in early trades. The Sensex was trading above 8550 and the Nifty went past 2570 in early trades.

However, selling emerged at higher levels and the indices lost ground steadily till late in the afternoon. Some of the major gainers from previous week corrected on profit booking and pulled down the indices. Large FII purchase figures in the F&O segment late last week did not help the indices much.

The mood changed in the last half-hour as select stocks surged substantially on heavy buying. Heavyweights like HDFC Bank, ICICI Bank, SBI, ONGC and Reliance Industries pushed the indices back into positive territory and they closed the day with gains.

The day belonged to banks, led by HDFC Bank which surged over 6 per cent. HDFC Bank is not known for such sharp moves and has been a steady stock without much volatility throughout this bull run. After remaining firm throughout the session, the stock surged in late trades.

HDFC Bank's parent, HDFC added close to 3 per cent while ICICI Bank gained over 2 per cent. SBI closed the day with gains of over a per cent. Oriental Bank added over 4 per cent.

Pharma stocks continued their good run, once again led by Ranbaxy. The stock closed the day with gains of close to 3 per cent. Dr. Reddy and Cipla also closed marginally higher.

VSNL was another significant gainer which saw a sharp up move in the closing minutes. The stock added over 5 per cent.

Technology had a mixed day today. TCS closed almost 2 per cent higher, helped by some positive news flows. Infosys declined over a per cent. HCL Tech lost close to 2 per cent. Wipro closed flat while Satyam ended lower.

Auto stocks also had a mixed day as some of them corrected after the huge surge last week. Hero Honda declined on profit booking and closed more than 2 per cent lower. Bajaj Auto resisted selling pressure and managed to close with gains. Maruti shed over a per cent and Tata Motors ended flat.

Profit booking was seen in most other sectors. Capital goods and engineering stocks came under pressure and BHEL closed nearly 2 per cent lower. ABB and L&T also closed with losses of over 1.5 per cent each.

Sensex closed at 8494, a gain of 23 points, and the Nifty at 2559, higher by 10 points. Nifty November futures closed at the same level as the spot index.

HDFC Bank, VSNL and OBC were the major gainers among Nifty stocks while Hero Honda, HCL Technologies and BHEL were the only losers.

Hindalco has priced its rights issue at Rs96 per share, or a premium of Rs95 on every Re1 share. The company is coming out with an issue in the ratio of one share for every 4 shares held. The proceeds from the issue would fund the capacity expansion plans of Hindalco.

Tata Motors has started commercial production of a new generation of heavy commercial vehicles with technology from Tata Daewoo of South Korea. The company is planning to launch a range of vehicles in the domestic market including tippers and dump trucks. Localisation of components would be done gradually and the vehicles would be launched with a 75-per cent import content.

TCS has formed a joint venture with SBI to offer technology solutions and consulting services in the banking space. TCS would hold a 51-per cent stake in the new company to be called C-Edge. The new company would leverage the technology expertise of TCS and domain knowledge of SBI. C-Edge would have an authorised capital of Rs40 crore.

TCS has stated that it has no immediate plans to merge CMC with itself. There has been considerable market speculation about merging the other Tata group technology companies with TCS for the last few years. TCS had decided to merge Tata Infotech with itself recently. The company holds 41 per cent stake in CMC, which was a PSU company till TCS took over.

After Tata group company VSNL, PSU telecom company MTNL may become the second Indian entity to start telecom operations in South Africa. The telecom minister has said the company would evaluate the possibility of starting operations in that country.

Zee Tele would invest Rs100 crore to build its television channels in the Middle East regions. The company has launched a dedicated channel for the region, which would offer Arab music and lifestyle programming. The channel would also be available to DTH subscribers in India and other Asian countries.

Reliance Energy is reportedly in talks with Canadian engineering company Bombardier to jointly bid for the Hyderabad Metro rail project. According to reports, Bombardier would provide engineering solutions while Reliance Energy would handle project management and energy supply. The total project is expected to cost Rs6,000 crore.

Satyam Computer Services has formed a JV with a Hungarian technology institute to develop new platforms and services. The venture would focus on areas like grid computing and data mining.

Oil pipelines major Gail is the first to announce firm plans to enter the NLD telecom services segment after the government threw open the business to new players last week. The company said it is planning to build a nationwide fibre optic network in association with Power Grid Corporation and Rail Tel, the telecom division of Indian Railways. The venture would focus on providing private telecom network services to large customers of the company. (See:GAILTEL, RAILTEL and Power Grid Corp in broadband partnership)

ICICI Bank has reportedly tied up with Bank of East Asia, based in Hong Kong, to offer specialised services to each others' customers. As per the deal Bank of East Asia would offer trade finance and currency related services to ICICI Bank's customers who have operations in the Far East including China. ICICI Bank would in turn offer similar services to Bank of East Asia's customers in India.

Mid-Cap Action

Mid-caps also saw selective profit booking in some of the significant gainer from last week. However, there was no broad based selling and some stocks continued to run up. The CNX Mid-Cap index gained 11 points and closed the day at 3711.

Mercator Lines, one of the largest players in shipping, is planning to spend Rs2,250 crore on expanding its fleet size over the next few years. According to media reports, the company is buying 5 vessels in the short term at a cost of Rs1,300 crore. The company had completed a FCCB issue recently.

Offshore services company Dolphin Offshore has informed the exchanges that the company has received an order from L&T for replacement of undersea pipes in Bombay High.

Software company Mastek is looking at an acquisition strategy to facilitate inorganic growth. The company is yet to identify potential targets and is also planning to forge more joint ventures.