The markets opened the day on a steady note with the Sensex opening above the 7800-mark and touching a high pf 7818 in early trades. The indices came down from their highs within the first hour itself as selling pressure emerged.

The indices traded within a narrow band close to yesterday's closing levels till late in the afternoon. Weakness in technology and banking stocks were countered by a surge in steel stocks and select power stocks.

The indices declined sharply towards the close of the day as traders booked profits after nine sessions of gains.

Sensex closed at 7754, a loss of 43 points, and the Nifty at 2361, a loss of 7 points. Nifty August futures discount to the spot index widened to 10 points from yesterday's 8 points.

SAIL, Tata Power and Bharti were among the major gainers among Nifty stocks while HCL technologies, Bajaj Auto and Satyam Computer were the major losers.

US markets closed on a weak note yesterday on surging crude oil prices and disappointing sales growth from retailing companies. The Dow Jones index and S&P 500 closed with losses of over three quarters of a per cent while NASDAQ lost well over a per cent.

Crude oil futures bounced back after Wednesday's fall and closed the day with gains of a per cent yesterday. NYMEX crude has surged above $62 per barrel in early European trades today on worries of disruption in US crude refineries. The commodity had touched an all time high of $62.5 per barrel on Wednesday.

Except for VSNL which surged 8 per cent, most Indian ADR's closed weak yesterday on the US exchanges. While ICICI Bank and MTNL lost over 3 per cent each, Satyam lost over 2 per cent. HDFC Bank lost close to 2 per cent while Wipro and Dr. Reddy's lost over a per cent each. Infosys and Tata Motors also closed the day with losses.

Reliance Industries has informed the exchanges that the de-merger scheme is still in the process of finalisation and would be formally announced only after it is approved by the board of directors. The company has also mentioned that the de-merger details reported in the media had not originated from the company.

Reliance Industries has also decided to acquire a 38-per cent stake in Reliance Energy from Reliance Power Ventures ahead of the de-merger process.

According to PSU oil marketing company sources, Reliance Industries has offered a total discount of Rs1500 crore to marketing companies purchasing refined petroleum products from its refinery.

The government has formally set aside the BHEL disinvestment programme. The stated reason is administrative hurdles but it is clear that the Left parties have succeeded in browbeating the government.

The government has also decided to cancel the balance stake sale in Maruti Udyog as well. This could well mean curtains for the disinvestment programme for the rest of the present government's term in office.
After remaining off radar for a long period, the merger between BSNL and MTNL has resurfaced. According to reports, the ministry of telecom has decided to speed up the merger. The ministry has ruled out any divestment in either of the companies.

Tata Power surged ahead after the company announced that it will invest Rs18,500 crore over the next five years to expand its generation capacity. The company would also consider the nuclear energy business as an area for growth. The stock closed 5 per cent higher.

BK Birla and grandson Kumarmangalam Birla of the Aditya Birla group have bought out 27 per cent stake in Birla group holding company Pilani Investments from other Birla families. After this acquisition, combined holdings of the BK Birla-Aditya Birla group in Pilani Investments would go up to 49 per cent.

KK Birla, who owns 7 per cent in Pilani, has also reportedly agreed to sell his stake to BK Birla. That leaves the MP Birla group, with a 25-per cent holding, as the second largest shareholder in Pilani. MP Birla group is now under the control of RS Lodha and the rest of the Birla families have challenged him in court.
BK Birla is expected to transfer his holdings in Pilani to Kumarmangalam Birla, thereby anointing the younger Birla as the heir of the BK Birla group as well. Pilani investments hold stakes in companies like Century Textiles, Indian Rayon, Hindalco, Grasim, Kesoram Industries, Mysore Cements, etc.

TCS has entered into an agreement to provide optimisation solutions to an Italian biotechnology company's drug discovery programme. The contract is estimated to be worth €1 million. This is for the first time that the company is venturing into a service outside software delivery and consultancy.

TCS has identified drug research as a major growth area and is focussing on providing R&D solutions to drug companies to reduce costs. Major pharmaceutical companies spend upwards of $40 billion annually on drug research and TCS estimates that it can address at least 10 per cent o this market. The stock closed lower.
Textile major Arvind Mills has raised $35 million by way of a GDR issue. The GDR's will be listed on the Luxembourg Stock Exchange. The stock lost a per cent today.

Steel stocks had a fantastic day led by PSU giant SAIL which closed with gains of over 7 per cent. Tata Steel gained over a per cent. Among smaller steel stocks, Essar Steel and Ispat Industries gained over 5 per cent each.

Steel stocks had witnessed some correction as the companies had reduced steel prices during the last quarter. The quarterly results of frontline steel companies were disappointing as well. The latest upsurge in stock prices came after a leading foreign brokerage raised its outlook for the global steel sector.

Mid-Cap Action

The weakness in frontline stocks hardly had any impact on the mid-cap stocks which continued their strong run into the third day. The CNX Mid-Cap 100 index closed the day at yet another lifetime high of 3553, a gain of 28 points.

IVRCL Infrastructure rose to a 52-week high after the company announced new orders worth Rs600 crore. The orders are for rural electrification and water supply schemes in the states of Uttar Pradesh and Gujarat.

Mid-cap software company Aftek Infosys reported a 57 per cent increase in first quarter revenues as compared to the same quarter of previous year. Net profits were flat as the company had to bear the cost of revaluation of foreign currency assets and expenses of an FCCB issue.

Media company Balaji Telefilms reported a 40 per cent rise in first quarter revenues as compared to the same quarter of previous year. Profits for the quarter were higher by 13 per cent.

Mid-cap software company Geodesic Info was locked in the 20 per cent upper circuit for the second day today. The stock has gained over 50 per cent over the last 1 week and has doubled over the last 1 month. The company has scheduled a board meeting to decide on a preferential issue to an overseas investor.

The board of directors of Assam Company has decided to de-merge the oil and gas exploration division into a separate company. The oil and gas division owns an oil block in Assam where the company expects to start operations shortly. The details of the de-merger are being worked out.

RPG group company Philips Carbon Black gained on media reports about the company's plans for overseas acquisitions. The company, which controls almost half of the domestic market, is reportedly planning to double its capacity over the next 5 years.

Crew BOS Products, Geodesic Info and Vintage Cards were among the best performing stocks among mid-caps.

Gufic Bio, Thermax and Venky's India 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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