The Hindu : Cyclicals keep bourses busy

Online edition of India's National Newspaper
Monday, Feb 16, 2004

Business

Business

Cyclicals keep bourses busy

SUSTAINED BUYING in cyclical stocks by foreign institutional investors kept the market alive last week. Barring a day or two, the intra-day volatility witnessed in earlier weeks was absent. Foreign institutional investors turned buyers and stocks of banking, refinery, cement, steel, automobile, power and FMCG were in demand. Index heavyweights attracted good institutional support.

The market sentiment was boosted by the Central Statistical Organisation (CSO) reports that a rebound in the farm sector would drive recovery in 2003-04 and that the gross domestic product would grow 8.1 per cent in the current financial year. Figures released by the Government recently suggesting industrial production grew by 6.2 per cent during December and manufacturing sector witnessed a rise in demand following a good monsoon helped in reviving overall sentiment.

Marketmen also expected an improved performance from companies during the fourth quarter of the current fiscal.

The BSE 30 share index gained 225.31 points to end the week on a positive note at 6011.66.

Buying was seen in technology, cement and auto sector shares.

Reports that the Finance Ministry has decided to allow software exporters to claim tax deduction, with retrospective effect, on profits earned from software services rendered on-site helped keep the interest in technology sector pivotals. Exporters will enjoy the benefit of tax deduction on such profits earned from April 1991 to April 2004.

Among auto stocks, M&M was firm after the company announced that it had entered into an agreement to buy a majority stake in the U.S. software firm, Bristlecone. The company said that it would form a joint venture by investing up to $7 million in one or more phases and transferring five consulting and inter-trade subsidiary companies to the joint venture. Other auto stocks including Maruti and Telco also attracted buying interest.

Bharat Forge witnessed significant buying interest. In the light of high growth prospects in the domestic and export markets, the company is planning to set up world-class capacities in both forgings and machining.

The news of a price hike saw cement stocks attracting buying interest. ACC, Grasim and Gujarat Ambuja also gained momentum. Mangalam Cements remained firm on sustained buying.

Engineering stocks such as BHEL and Cummins continued their upsurge.

Selective news-driven buying was seen in private sector banking stocks. UTI Bank spurted following reports that HSBC has received approval from the Foreign Investment Promotion Board (FIPB) for its investment in UTI Bank. ICICI Bank, though dipped with the announcement of a mega public issue, regained towards the close of the week.

Bank shares including Vijaya Bank, Indian Overseas Bank, Bank of Baroda, PNB, Canara Bank and Corporation Bank ended with gains. Oil and gas stocks managed to hold ground in an otherwise volatile market. GAIL, BPCL and ONGC ended in the positive territory on sustained buying.

The Government will be coming out with public issues for the sale of its 10 per cent stake each in ONGC and GAIL.

Commodity stocks too continued their good run on bourses. Hindalco and Nalco gained further ground on sustained buying on firm trend in global aluminum prices.

Tata Steel remained firm on sustained buying on the back of a firm trend in global steel prices.

In stock specific activity, Zee Telefilms was in the limelight ahead of the company's board meeting to consider raising of funds in the domestic or foreign markets.

Bharti Tele-Ventures firmed up further. The company said on Wednesday that it had received Government permission to provide wireless services in five new circles, enabling it to manifest a national reach.

On the pharma sector, Alembic and Wockhardt rose following the announcement of the bonus issue.

Alembic has recommended a liberal bonus issue of two shares for every equity share held. The surge in Wockhardt was on the announcement of a 1:2 bonus (for every two shares held, the company will issue one share) and a stock split. The company's stock will be split into two shares of the face value of Rs. 5 per share from one share of the face value of Rs. 10.

Glaxosmithkline Pharma ended higher on encouraging Q4 results. Dr. Reddy's Lab closed lower, as selling continued after the company said that the U.S. FDA has planned to review its application to market a version of Pfizer's anti-hypertension drug Norvasc in the U.S.

Rupee at new high

In what has been a dull trading week, the rupee closed at a 42 month high against the dollar at 45.23/24. Global markets were not unduly influenced by the economic news flowing from developing economies. In India, it has been demand and supply factors as usual.

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