Strong FII inflows and good support from domestic mutual funds continue to fuel the rally and push the indices to new lifetime highs on a daily basis. The last 500 points on the Sensex was gained in just two weeks and there seems to be no stopping even after crossing 8000.

Markets opened the day with a good positive gap from Friday's closing and remained firm throughout the day. The up trend was not threatened even once during the session as many of the large cap stocks attracted buying interest.

The Sensex crossed 8100 with ease before noon and continued to gain strength in afternoon trades as well. The Nifty inched closer to the 2500 mark and touched a high of 2485 in afternoon trades. Both indices closed near the day's highs as the buying continued in closing hours as well.

Sensex closed at 8138, a gain of 78 points, and the Nifty at 2484, a gain of 29 points. Nifty September futures closed at a discount of 4 points to the spot index.

FMCG stocks attracted a lot of buying interest today as a healthy monsoon is expected to boost rural demand for consumer products. HLL and ITC were among the major gainers, both stocks closing more than two per cent higher.

Grasim, IPCL and GAIL were the biggest gainers on the Nifty while Glaxo, Colgate and Reliance Energy were the major losers.

Gains on the super heavyweights ONGC and Reliance Industries also added to the strength in frontline indices. Both stocks closed with gains of over a per cent each.

Technology stocks were led by TCS, which closed with gains of well over two per cent. Infosys, Satyam and Wipro also closed with gains.

Aditya Birla group flagship Grasim was the biggest gainer among index stocks after the group announced a mega merger between three other companies yesterday. Grasim closed with gains of over 4 per cent.

The Aditya Birla group has announced a major restructuring exercise to merge Indo-Gulf Fertilisers and Birla Global Finance into Indian Rayon. Shareholders of Indo-Gulf and Birla Global would get one share of Indian Rayon for every three shares held by them. The merged entity would be called Aditya Birla Nuvo Limited, in which promoters would hold close to 39 per cent.
Aditya Birla Nuvo would be a diversified entity having significant interests in telecom, garments, carbon black, viscose filament yarn, fertilisers, IT and financial services. The combined revenues for the last financial year was close to Rs4,000 crore with a total networth of over Rs1,800 crore as of March 2005. The management expects the merged entity's total revenues to be close to Rs6,000 crore by the end of this financial year.

The business portfolio of Aditya Birla Nuvo would include Madura Garments in garment manufacturing, PSI Data and Transworks in ITeS and Birla Sunlife in insurance and mutual funds, apart from the yarn, textiles and fertiliser businesses. The company would also hold a 50 per cent stake in GSM mobile operator Idea Cellular, the rest being held by the Tata group.

Indian Rayon closed the day with losses of 6 per cent after opening with gains, as the merger ratio is not perceived to be beneficial to it's shareholders. Indo-Gulf closed 9 per cent higher while Birla Global Finance closed with gains of 5 per cent.

Pharma major Ranbaxy has confirmed that it is evaluating acquisition of front-end or marketing companies in the US and Europe to emerge as one of the top five generic players globally. The company would also look at acquiring domestic companies with significant manufacturing and research capabilities.

Ranbaxy's board had recently cleared a proposal to raise up to $1.5 billion to fund these acquisition plans. The stock closed with marginal losses.

According to news agency reports, Wipro is planning to open a development centre in Beijing shortly. TCS and Infosys already have development centres in China.

Mid-Cap Action

Mid-caps also regained their momentum today after the dull session on Friday. Gains on the mid-cap index were once again higher than the frontline indices, though only marginally. The CNX Mid-Cap index closed above 3800 for the first time today at 3808, a gain of 46 points.

As expected, there were no takers for the open offer for Adlabs shares from ADAE group. The offer to acquire shares at Rs183 per equity share has closed without even a single shareholder accepting the offer. The shareholding of ADAE group in Adlabs would remain at around 45 per cent till the conversion of warrants. After the conversion of warrants at Rs175 per share, the total stake would go above 50 per cent.

South based Sanmar group would sell part of its holdings in India Cements to co-promoter N Srinivasan. The group would sell close to 12 per cent stake to N Srinivasan, who now holds close to 20 per cent in the cement company. Sanmar group's holding would decline to 13 per cent after the transaction.

The number of companies going for overseas capital issues continues to increase by the day. Plastic containers and textile manufacturer Sintex Industries approved plans to raise up to $60 million by issuing GDR's or FCCB's.

Construction company Madhucon Projects is also planning to raise up to Rs360 crore from an issue of GDR's or FCCB's. The company said its board would meet shortly to consider the proposal. The stock was trading higher by 2 per cent by early afternoon.

Shareholders of Balrampur Chini have also approved plans to raise up to $50 million from a GDR or FCCB issue. The board of directors of Taneja Aerospace will also meet shortly to consider a GSR issue.

Jindal Worldwide would issue bonus shares in the ratio of three shares for every share held, subject to shareholder approval. The stock gained 5 per cent in early trades on the BSE.

Gujarat NRE Coke would acquire a 5 per cent stake in an Australian coal mining company for close to $6 million. The company has also agreed to purchase up to 5 million tonnes of coal from the Australian company over the next 10 years. The stock was trading with gains of over a per cent in early afternoon trades.

Strong buying was seen in paper stocks today led by Bilt, which gained over 4 per cent. Sirpur Paper, TN Newsprint, AP Paper and Pudumjee Pulp were among the other gainers.

BPO company Hinduja TMT has opened a new contact centre in Mauritius. The centre would have a capacity to seat 350 employees and is its fourth location outside the country.

Construction company IVRCL has completed the acquisition of a 70 per cent stake in engineering company Hindustan Dorr Oliver.

UTV Software has teamed up with a Malaysian company to offer children's television channels in South East Asia. The company would provide content and marketing support to the venture. The stock was trading with gains of over 3 per cent in early trades.

PSU stock HMT gained well over 5 per cent on reports that the central government has approved a revival package worth over Rs800 crore.

Mid-cap steel stocks saw heavy buying and many of them closed with significant gains. Jindal Stainless, SAL Steel and National Steel were among the biggest gainers.

India Infoline, Sundaram Finance and Kotak Bank were among the significant mid-cap gainers.

Sasken Communication, Hotel Leela and Kinetic Motors 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

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List of general reports on finance