After touching new intra-day highs, indices correct on profit booking

20 December 2005

Indices opened on a positive note and touched new lifetime highs soon after opening. Despite a weak US closing yesterday, Asian markets maintained their levels today. The Japanese index was the best performer as it continued its uptrend with another 1.5 per cent gain.

The Sensex recorded a new intra-day lifetime high of 9428 in early trades and the Nifty saw a new high of 2853.

After trading within a range till noon, the indices slipped to the day's lows by early afternoon trades. This was followed by a sharp recovery though they never managed to go back into positive territory.

The last hour saw more weakness as there was not much buying support. There was no clear sectoral action today, except for the weakness in technology stocks. There were winners and losers in almost all sectors.

Technology stocks were the worst affected today, led by Satyam. The stock lost nearly 3 per cent. TCS gave up more than 2 per cent while HCL Technologies shed close to 2 per cent. Wipro was the lone winner in this space, closing nearly 2 per cent higher.

Hindalco saw some profit booking and closed nearly 2 per cent lower.

Pharma stocks had a mixed day today. Dr Reddy's was the best performer among index stocks, closing nearly 4 per cent higher. Sun Pharma was the biggest loser among index stocks, declining more than 3.5 per cent. Ranbaxy continued its weakness from yesterday and gave up another 3 per cent.

Banking stocks also had a mixed day as HDFC Bank surged more than 3 per cent while PNB declined close to 2 per cent.

Sensex closed at 9346, a loss of 48 points, and the Nifty at 2826, lower by 16 points. Nifty December futures closed at the same level as the spot index.

Dr Reddy's, MTNL and HDFC Bank were the biggest gainers among Nifty stocks while Sun Pharma, Satyam and Ranbaxy were the major losers.

Technology stocks led a decline in US indices yesterday after a brokerage firm downgraded the sector. Profit booking was also seen in some of the better performing stocks of this year. Pharma stocks like Pfizer had a good day, bolstered by the positive ruling on atorvastatin.

The Dow closed nearly 0.4 per cent lower while the S&P 500 lost over half-a-per cent. Losses on the NASDAQ were the highest in two months at more than 1.3 per cent.

Crude oil closed almost flat yesterday around the $58 per barrel mark. January futures on the NYMEX closed at $58.05 per barrel, giving up its gains in Asian and European trades earlier in the day. The commodity is trading with gains and is close to $58.5 per barrel in early European trades today.

Wipro has announced a major acquisition in Europe. The company said it would acquire all of system-on-chip design company NewLogic based in Austria. Wipro would pay $25 million in cash up front and another $31 million over the next few years depending on achievement of financial performance of the Austrian company.

New Logic is expected to report revenues of close to $20 million this year and employs more than 100 people in Europe. The company has more than 25 patent filings and has many major clients including Philips. The acquisition would strengthen Wipro's abilities in chip design and RF equipment design.

The Director General of Hydrocarbons has announced that Reliance Industries has made a new oil discovery in the Krishna-Godavari basin. Estimates of reserves were not made available.

Infosys is planning to invest over Rs100 crore to expand its development centre in Orissa. According to media reports, the company would add another 3,000 employees at this centre over the next few years.

Reliance Energy has informed the exchanges that it would invite bids for the construction of the new power plant at Dadri in UP shortly. The combined-cycle power plant with a capacity of 5,600 MW would be the largest such plant in the world. The company said it would select the EPC contractor for the project through international competitive bidding.

ICICI Bank will invest more than Rs1,200 crore in ICICI Prudential Life Insurance Company to finance its expansion plans. ICICI Prudential, the country's largest private life insurer, is a joint venture between ICICI and Prudential group of UK with ICICI holding a 74 per cent stake. The bank would also invest around Rs400 crore in its general insurance subsidiary, ICICI Lombard.

Tata Daewoo, the Korean subsidiary of Tata Motors, has signed an agreement with a Pakistani business group to sell commercial vehicles. As per the deal, the Pakistani group would import knocked-down kits from Tata Daewoo and assemble them locally. The operations are expected to start later next year.

Media reports indicate that IDBI Bank is in negotiations to acquire a bank with more than 1,000 branches. Reports quoting the bank management mention that IDBI is in talks with three banks. IDBI is also believed to be in discussions with three foreign insurers for entering the insurance sector.

Private equity firm Warburg Pincus has sold a nearly 5-per cent stake in Gujarat Ambuja Cements to two FII's.

The board of MRF has approved a final dividend of 140 per cent, taking the total dividend for the year ended September to 200 per cent.

Mid-Cap Action

Mid-caps also corrected today, in line with the trend in frontline stocks. The newly listed stocks, which had appreciated sharply over the last few sessions, corrected on profit booking. The CNX Mid-Cap index lost 16 points and closed the day at 3991.