Markets were in a celebratory mood in the morning after reports of the arrival of monsoon in coastal Kerala. The arrival of rains couple of days earlier than expected and the positive forecast from meteorological department helped the indices to overcome weak global cues.

Reliance group stocks continued to trade firm in early trades even after the company refused to comment on media reports about a settlement.

Bank stocks were the flavour of the day on speculation that the government may allow higher foreign investment limits in SBI. The stock gained close to 2 per cent in morning trades.

Power stocks like NTPC and Tata Power made strong gains early in the morning. NTPC had gained well over 4 per cent by early afternoon and Tata Power more than 2 per cent. The Sensex and Nifty managed to cross psychological marks of 6800 and 2100 respectively.

However, markets could not hold on to gains and a sudden bout of selling pressure saw the indices giving up all their gains in the last one hour. Some amount of profit taking was clear in Reliance stocks as they gave up all their gains. The power stocks also gave up most of their gains.

Weakness was visible in oil marketing stocks as the government continues to search for new calculations to avoid a politically dangerous fuel price hike. Metal stocks were also weak during the day.

As per latest reports the government has asked oil-marketing companies to negotiate with refiners to bring down the cost of fuel. In other words, the government wants the refiners to reduce their margins and help the marketing companies to recover part of their losses.

Sensex closed at 6758, up 5 points and the Nifty at 2093, almost no change from Saturday's close. Nifty June futures discount to the spot narrowed to 14 points.

Among Nifty stocks, Oriental Bank of Commerce, HDFC Bank and SBI were the major percentage gainers while HPCL, BPCL and Hindalco were the major losers.

Crude futures for July delivery continued its upward march in early Asian trades today after reports that two refineries in the US were shut down over the weekend. This led to fresh worries about fuel supplies as demand peaks in the coming summer season. Crude is trading well above $55 to a barrel mark, a gain of close to 20 per cent from its recent lows of $47.

Tata Steel has signed an agreement with the government of Chattisgarh to set up an integrated steel plant. To be built over a period of 5 years, the plant will have a total capacity of 5 million tonnes per annum. Capacity in the first phase will be 2 million tonnes. The new plant will focus more on long products.

Tata Steel is also planning a greenfield steel plant in Orissa with a capacity of 6 million tonnes. Once these new plants and the proposed expansion at Jamshedpur are complete, Tata Steel's capacity would near the 20 million tonnes per annum mark. The stock closed over a per cent lower.

ONGC gained over a percent on reports that the company has bid for four oil and gas exploration blocks in Nigeria. There are also reports that the company is negotiating with domestic refiners for international prices for the crude produced by it. At present, the refiners pay a lower price to ONGC.

After trading flat in the morning session, Ranbaxy shot up close to 2 per cent early in the afternoon. There have been reports and speculation about a possible settlement with Pfizer on a patent challenge. Ranbaxy had challenged Pfizer's patent extension for a cholesterol-lowering drug called Lipitor and the final court decision is awaited.

According to reports, Pfizer may reach an out of court settlement with Ranbaxy and would pay the Indian company a substantial amount to drop its patent challenge. The reported settlement figure varies from $90 million to a huge $1.5 billion. Ranbaxy has denied all such reports.

Maruti started the construction of its new car manufacturing plant in Haryana. Set up as a joint venture with parent company Suzuki, the new plant is expected to start production by the end of 2006. Maruti will hold a 70 per cent stake in the company.

Bank of Baroda, one of the largest public sector banks, revealed a new corporate logo today. The bank would undertake large-scale technology up gradation and establish a network of ATM's. BoB has one of the largest international branch networks among Indian banks. The bank is looking at an acquisition in Africa.

Ashok Leyland has reported a sales growth of close to 20 per cent for the month of May as compared to the same month of previous year. Vehicle production increased by over 40 percent. The stock gained over 2 per cent after the report came in.

Larsen & Toubro gained close to a per cent after the company reported that it has won a contract worth $19 million for a cement plant in Oman.

As expected, Tata Chemicals has submitted a higher bid for Egyptian Fertiliser Company. At the revised offer price the company is the highest bidder and the deal will be worth over $500 million.

Mid-Cap Action

Mid-cap stocks were less affected by the late selling pressure in frontline stocks. CNX Mid-Cap 200 index closed at 3036, up 17 points. This is a new all time high closing for the index.

Engineering company Praj Industries gained close to 10 per cent in early trades after the company announced that its board will meet soon to decide on a bonus issue and stock split. The company is a market leader in designing and construction of ethanol manufacturing plants.

Munjal Auto, a manufacturer of automobile forgings, declined over 5 per cent in early trades after the company denied reports of major export orders. The stock had appreciated substantially over the past few days after reports that General Motors and Ford Motors are about to place large orders with the company.

Indian Hotels, which runs the Taj chain and is a part of the Tata Group, announced its results for the quarter and year ended March. For the quarter, profits have increased close to 15 per cent on a revenue growth of over 20 per cent. Full year profits are higher by around 30 per cent.

Dabur Pharma gained over 5 per cent in early trades after reports that International Finance Corporation is picking up a 15 per cent stake in the company for $15 million. IFC is the private financing arm of the World Bank.

Tea plantation company, Williamson Magor, gained over 5 per cent in early trades on reports that the BM Khaitan group is planning to acquire the company. McLeod Russell, the tea company owned by the Khaitans, would become the largest bulk tea producer in the world after the deal.

Archies Limited, Precision Wires and Crest Animation were among the best performing stocks among mid-caps.

Shriram City Union Finance, Shriram Investments and Lloyds Electric & Engineering were among the significant mid-cap losers.

*Disclaimer: The author does not have any position in the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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