Indices recover from early losses and close higher

The markets opened with gains yet again despite a flat closing by the US markets yesterday and weakness in most Asian markets except Japan. Even a bounce back in oil prices could not dampen the sentiment.

However, the markets were much more volatile today as they slipped into the red by mid-morning and the indices lost over half a per cent each. They recovered soon after and by noon they were back in the positives. The recovery was helped by some of the biggest stocks like ONGC, Reliance, ICICI Bank and SBI which gained considerable ground.

The indices surged in late afternoon trades as these big stocks maintained their uptrend. There was no selling pressure even in the closing minutes and the indices closed at near their day's highs.

Banking stocks were the best performers in today's trade. ICICI Bank recovered from a mid-session decline and surged in afternoon trades to close more than 2 per cent higher. SBI added well over 1.5 per cent. HDFC Bank also gained over a per cent. PNB added well over 2 per cent. HDFC closed 2 per cent lower.

ONGC saw a sharp surge in the afternoon after the company said its recent Nigerian deal in association with the Mittal group is one of the largest oil deals in the global oil industry. Reliance Industries also maintained the uptrend and closed with gains of well over a per cent.

Auto index gained close to 1.5 per cent, helped by an over 2 per cent rise in Tata Motors. M&M added over a per cent while Ashok Leyland gained over 4 per cent. Maruti closed nearly a per cent higher.

Pharma stocks put on a good show, led by Ranbaxy which held firm throughout the session. The stock closed nearly 3 per cent higher. Glaxo added over 2 per cent. Dr. Reddy closed with losses.

Technology stocks had a lacklustre day as Infosys closed more than a per cent lower. TCS declined close to half a per cent. Wipro added well over a per cent and Satyam also managed to close with gains.

Sensex closed at 8650, a gain of 54 points, and the Nifty at 2604, higher by 21 points. Nifty November futures closed at a premium of 7 points to the spot index.

Dabur, Ranbaxy and Glaxo were the major gainers among Nifty stocks while HDFC, Infosys and Jet Airways were the major losers.

US markets once again gave up early gains and closed flat yesterday. Auto and banking stocks pulled down the Dow after reports of moderate inflation helped the indices to open in the positive.

The Dow lost one-tenth of a per cent while the S&P 500 closed with gains of one-fifth of a per cent. NASDAQ recovered in the closing hours and ended marginally higher.

Crude oil prices staged a smart pull back yesterday and closed more than 1.5 per cent higher. The recovery came after the weekly US inventory data showed an unexpected decline in crude oil stocks. December crude futures closed at $57.88 to a barrel. The commodity is trading with marginal losses in early European trades today.

Indian ADR's had a good day yesterday with some of the stocks gaining substantially. ICICI Bank, Tata Motors and Dr Reddy added well over 2 per cent each while HDFC Bank gained close to 2 per cent. Technology stocks were weak with Wipro losing almost 2 per cent and Infosys also closing lower.

ICICI Bank has said that its proposed public issue would open most likely by December in both the domestic and international markets. The bank has made the regulatory filings in the US ahead of the international offering.

ICICI Bank is expected to raise a total of Rs7,000 crore with an additional 15 per cent as green shoe option from the issue. The size of the domestic issue would be considerably higher than the international offering.

After announcing a tie-up with HPCL for overseas exploration bids yesterday, Gail is now planning to acquire a mid-sized oil exploration and production company. An acquisition would provide the required expertise while bidding for exploration blocks. The company has reportedly set aside $500 million for the acquisition.

Reliance Industries has reportedly informed the government about another significant gas find in the Krishna-Godavari basin. The potential reserves are yet to be estimated but the find is believed to hold significant potential. Reliance had made large gas discoveries in other blocks in the same basin earlier.

HPCL is reportedly in talks with Shell to pick up a 26-per cent stake in the latter's LNG terminal in Hazira, Gujarat. Gail is another company which is also interested in acquiring a stake in the terminal, set up at a cost of $600 million. However, Shell, which is expected to retain a majority stake, is reportedly keener on HPCL as an equity partner.

Mahindra & Mahindra has signed the agreement with International Trucks of the US to launch commercial vehicles in India. The new company would be called Mahindra International in which M&M would hold 51-per cent stake with International holding the rest.

The company would invest $80 million and commercial launch of its models are expected in 2007. M&M had transferred its LCV business along with assembling facilities to the new venture.

Tata Motors is studying the feasibility of setting up an assembly unit in South Africa and a bus building unit in Turkey. These are part of the company's push to double its revenues over the next five years. Overseas revenues as a percentage of total revenues are expected to rise significantly in the next few years.

Tata Motors has said that its vehicles are receiving very good acceptance in South Africa, where it has become one of the leading players in commercial vehicles. The company is in negotiations with local companies to set up an assembly unit in Russia for passenger cars. It is also looking at increasing the capacity at its Korean commercial vehicles subsidiary, Tata Daewoo.

Engineering major L&T will tie up with Hutchison Port Holdings of Hong Kong to bid for the offshore container terminal at Mumbai, as per newspaper reports. Hutchison is one of the largest port operators in the world and is expected to manage the terminal operations, if their bid is successful. The terminal project is expected to cost Rs1,200 crore.

Union Bank of India has reportedly received government approval for its proposed public issue. The bank is planning to raise over Rs500 crore to strengthen its capital base ahead of the Basel norms implementation. The government holding in the bank would decline by 5 per cent to 55 per cent after the issue.

HCL Technologies and IBM have entered into an agreement under which HCL would set up a design centre for IBM microprocessor cores for non-traditional applications. HCL Technologies would acquire the license to use and sub-license microprocessor core technology from IBM.

According to media reports, Grasim is planning to divest its textile brand Graviera and a manufacturing facility in Rajasthan. The company is reportedly in talks with some potential buyers and is looking at a valuation of Rs100 crore.

Meanwhile, another Aditya Birla group company, Indian Rayon, is planning to expand the retail network of its Madura Garments division. There are reports that the company would invest Rs125 crore to set up exclusive outlets and is targeting a top line of $100 million from the garments business over the next few years.

Sterlite Industries has reported a net profit of Rs81 crore for the quarter ended September as against Rs49 crore in the same quarter of previous year. Growth in revenues for the quarter was also impressive at over 65 per cent, touching Rs1,739 crore.

The government is planning to divest a 15-per cent stake in Shipping Corporation. The minister of shipping has reportedly confirmed that the disinvestment department would decide on the timing. Out of the 15 per cent being divested, 10 per cent may be offered to employees of the company.

Mid-Cap Action

Movement in mid-caps mirrored the frontline stocks as they also recovered from the mid-morning weakness and rallied in afternoon trades. Strong buying was seen in some of the momentum stocks like Titan, Reliance Capital and SRF. The CNX Mid-Cap index gained 20 points and closed the day at 3757.

Thermax Limited has reported a net profit of Rs25 crore for the quarter ended September as against Rs11 crore for the same quarter of previous year. Total revenues for the quarter were at Rs311 crore as compared to Rs222 crore. The company is planning to invest Rs100 crore in expanding capacities.

MMK, on of the largest Russian steel manufacturers, is reportedly planning a tie up with Uttam Galva Steels to set up a 10-million tonne integrated steel plant in Orissa. The project is still at a pre-feasibility stage and the Russian company has submitted a proposal to the state government. The project is expected to cost Rs30,000 crore.

Essel Propack would invest $25 million to expand capacity at its North American operations. The company is one of the global leaders in flexible packing tubes used by FMCG companies.