The indices opened the day on a firm note, with a good positive gap from Friday's closing levels. The sensex opened well above 7900 and seemed to be in a hurry to reach the keenly awaited level of 8000.

Good gains in select frontline stocks like ITC, VSNL, Gujarat Ambuja, SBI, Hero Honda and Hindalco kept the trading interest alive throughout the session. The indices maintained a steady trend with a positive bias till late in the afternoon.

The Sensex went within 20 points of the 8000 mark by early afternoon and touched a new lifetime high of 7983. The Nifty also recorded a new lifetime high of close to 2440.

A bout of profit booking in late afternoon trades saw the indices declining fast and losing most of their intra-day gains within half-an-hour. The attempt at recovery during the closing minutes was too feeble to regain much ground. Both indices, however, closed at new lifetime closing highs.

Sensex closed at 7925, a gain of 25 points, and the Nifty at 2423, a gain of 7 points. Nifty September futures closed at a discount of 6 points to the spot index.

Gujarat Ambuja Cement, ABB and ITC were the biggest gainers on the Nifty while BPCL, Zee Tele and SAIL were the major losers.

ITC is reportedly planning to build supr luxury hotels in Chennai and Bangalore. The company is searching for land in these two cities for building the new 7-star category properties. The stock closed with gains of well over 3 per cent.

Despite the uncertainty surrounding the Indo-Iran gas pipeline, GAIL has floated a global tender to appoint a technical consultant to the project. Serious doubts were raised about the viability of the project and political support was seen waning after US opposition to the project.

GAIL is planning a minority investment in a coal gasification project in China in partnership with a local company. GAIL is considering a Rs750- crore coal gasification project in the coal rich states of India as well. The stock closed with marginal gains.

ONGC has signed a preliminary agreement with the government of Andhra Pradesh for setting up a new refinery at Kakinada. The refinery would be set up as a joint venture among ONGC, MRPL and IL&FS with a capacity of between 5- and 7.5-million tonnes per annum. The project is expected to cost Rs5,500 crore. The stock gained well over a per cent.

Reliance Energy is expected to start work on its gas-based thermal plant in the state of UP shortly. The plant would come up within a Special Economic Zone (SEZ) being set up by the ADAE group at Dadri, close to Delhi. The first phase is expected to have a capacity of 1,400mw and would be operational within the next three years. The stock closed a per cent higher.

Pharma major Ranbaxy said its board would meet this week to consider a listing on US stock exchanges. The board would consider conversion of the GDR's issued earlier into ADR's as well was additional issue of securities. Analysts see this as a move to facilitate large overseas acquisitions. The company has already stated its intention to acquire mid-size pharma companies to emerge as a larger player in the international market. The stock closed with gains of well over a per cent.

Rumours about an impending acquisition by Essar Steel were back in circulation. The company is believed to be in negotiations to acquire a 2.5-million tonnes per annum steel plant in South Korea. The company had denied these rumours when they first appeared a few months back. The stock closed with gains of close to 5 per cent.

VSNL announced the completion of its take-over of Tata Power Broadband from Tata Power. The deal was concluded at a valuation of Rs239 crore. Tata Power Broadband, which has optic fibre networks in Mumbai and Pune, would become a wholly-owned subsidiary of VSNL. VSNL gained over 3 per cent while Tata Power lost 2 per cent.

Technology stocks saw some selling pressure after last week's rally following large order wins by TCS and Infosys. Both stocks lost over a per cent each.

Mid-Cap Action

Mid-caps also maintained the steady up trend and traced the movement in frontline stocks. The CNX Mid-Cap index closed the day at a new lifetime high of 3726, a gain of 13 points.

Bajaj Hindustan has reportedly approached the Supreme Court against the recent High Court ruling on de-licensing of the sugar industry. The current regulations allot a fixed geographical area to individual sugar mills for procurement of cane and de-regulation would do away with such restrictions. The High Court had ruled in favour of continuation of such restrictions. The stock closed 4 per cent higher.

Private Equity firm Barings denied reports that it is trying to change the management structure and key personnel at Mphasis BFL, in which it holds a 36-per cent stake. There has been market speculation that Barings would restructure the Mphasis management after its failure to sell its stake to a strategic investor.

Mid-cap software company Four Soft announced that it has acquired a UK- based software company, DCS Logistics. The acquired company provides software solutions for the transport and logistics industries.

DCS has operations in the UK, US and Netherlands and had revenues of around $20 million. The cost of acquisition was reported at Rs85 crore. Four Soft lost close to 12 per cent today after the significant run up over the last couple of weeks.

Print media company Deccan Chronicle said it would acquire Odyssey India for Rs61 crore. Odyssey India owns a chain of bookstores concentrated in the southern part of the country. It operates 12 stores across six cities at present and is expected to post revenues of Rs90 crore by FY 07. The stock lost close to 5 per cent today.

Pantaloon Retail said its sales for the month of August rose over 100 per cent as compared to the same month of previous year to Rs145 crore. The company is planning to open as many as 19 stores under various formats over the next 3 months. The stock lost a per cent.

Nagarjuna Construction has won an order for implementation of drinking water project for the city of Hyderabad. The order is reportedly worth Rs177 crore.

Steel Strips Wheels said its board has approved a new plant for manufacturing auto wheels at Jamshedpur. The company is a major supplier to Tata Motors and is scouting for and overseas technical partner for the project.

Su-Raj Diamonds saw considerable buying interest after the company said it is planning two jewellery-manufacturing units at Kolkata and Kochi in Kerala. The stock was trading with gains of 8 per cent in late afternoon trades.

Jain Irrigation gained over 5 per cent in morning trades after the company said its board would meet to consider an overseas acquisition. The target company is said to be a manufacturer of drip irrigations systems. Other details are not available. A private fund had reduced its stake in Jain Irrigation last week.

Bank of Rajasthan continued to buzz around today as well on rumours of a large stake sale to a foreign bank or large Indian corporate group. The stock opened the day with gains of well over 10 per cent.

Aurobindo Pharma has received tentative approval from the US FDA for an anti-HIV drug.

Blue Star Info, Harrison Malayalam and Cyber Media were among the significant mid-cap gainers.

HT Media, Flex Engineering and Jindal Drilling 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.

Other articles by Rex Mathew

List of general reports on markets

List of general reports on finance