Stocks weather profit selling

THE STOCK markets remained buoyant for most part of last week in volatile trading with a smart and consistent recovery in prices from the earlier subdued levels. The top gains of the week could not however be fully retained as the final hours on Friday witnessed a flurry of selling. The decision of the National Stock Exchange to impose stiff exposure margins on operators resulted in heavy sell-off in pivotal scrips.

The BSE benchmark 30-share index fluctuated during the week between 5263.11 and 5082.82 and breached the 44-month high when it closed at 5186.08 on Tuesday. It surged ahead in the next two days to 5226. The market opened firm on Friday but reacted sharply in the afternoon. Sensex closed for the week at 5131.72 against the previous weekend close of 5044.82, a net rise of 86.90 points.

Operators had built up long positions in blue chip counters in the seven-day long bull run, but reacted quickly to the margin calls and booked profits at higher levels.

Foreign institutional investors too pumped in sizable funds and made net investments of Rs. 1,367 crores in the first four sessions of the week while local funds made net purchases of Rs. 212 crores.

The volume of business on the BSE and the NSE was sharply up at Rs. 13,314 crores and Rs. 25,424 crores as compared to previous week's turnover of Rs. 8,365 crores and Rs. 18,136 crores respectively

Earlier in the week, the bullish fervour was aided by sustained foreign fund inflows, impressive vehicle sales for November, strong U.S. markets and rising hopes of peace on the India-Pakistan border.

There was a strong and broadbased show by the mid caps. SKF Bearings, Mirc Electronics, Escorts, Marico, Geometric Software, Essel Propack, Kochi Refinery, IDBI and Aurobindo Pharma were among the top winners. It was a 52-week high for SKF Bearing, MM Forgings and Mahavir Spinning. Others including Reliance, Sesa Goa, Kirloskar Oil and EID Parry saw new highs during the week.

Fresh gains were witnessed in oil and gas stocks. HPCL, IOC and Gail India surged ahead. The interest in state-run oil and gas companies has been fuelled by hopes that these would be declaring huge interim dividends.

Technology shares lost ground tracking volatile U.S. markets and a fall in ADRs of key Indian IT companies. ONGC gained on reports that the company had won 15 blocks in the latest round of the New Exploration and Licensing Policy.

Banking stocks, particularly private sector ones, remained in the limelight. ICICI Bank rose to an all time high on expectations that the Government would raise the FDI limit in private banks to 74 per cent from 49 per cent. UTI Bank gained after the news that HSBC had acquired 14.71 per cent in the bank from CDC at Rs. 90 per share. Other likely takeover targets like Global Trust Bank, Karur Vysya Bank and Federal Bank also closed higher.

Pharma stocks outperformed the overall market. Ranbaxy, Dr. Reddy's, Matrix and Divi's Labs closed higher. MNC pharma stocks such as Aventis, Novartis, Astra Zeneca, Wyeth, and GlaxoSmithKline Pharma also witnessed buying interest.

Siemens gained after media reports that its software arm has received a major order from a European company. Other power stocks such as ABB, CESC, Crompton and Alstom Projects also closed stronger.

Automobile stocks witnessed handsome gains. Bajaj Auto, Hero Honda, Ashok Leyland, Escorts and Punjab Tractors edged up on good support from investors.

Analysts expect consolidation at current levels. Any decline would attract buying in anticipation of higher fresh allocation to Indian equity by foreign investors.

With the Christmas and New Year fast approaching, a holiday mood has crept in on the forex markets. The rupee-dollar band is expected to remain narrow over the next two weeks or so. Which means that the rupee's appreciating trend — it has gained 33 paise since November — will be temporarily halted.

The European Union, the economic zone for the euro, is witnessing growth and the currency has been appreciating.

With the U.S. economy bouncing back (there is more evidence now) and with Japan also coming out of its slumber, the new year will decide the new currency levels. The outlook for the rupee that closed at 45.60 to the dollar remains confused. Economic news from India continue to be good, supply of dollars is steady but the future direction will depend on international markets too.

Our Bureau

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