The Hindu : Business : Stocks rally to new highs

Online edition of India's National Newspaper
Monday, Sep 20, 2004

Business

Business

Stocks rally to new highs

DISINCTIVE BULLISH conditions prevailed on the bourses last week despite the general concern over inflation and the high oil prices in global markets. The announcement of a fall in inflation rate below the 8 per cent level and expectations of equally good corporate results in the second quarter aided sentiment.

The Sensex crossed the 5,500 mark on Friday comfortably. Foreign institutional investors and domestic players were aggressive buyers in index heavyweights such as Reliance, ICICI Bank, SBI and ITC. Interested buying was witnessed in banking and steel sectors. Operators and retail investors also were making large commitments in mid-cap stocks in the last two trading days. The Sensex registered an increase of about 191 points for the week and closed at 5561.15 as compared to the 124 points gained in the previous week.

Between August 23 and September 17, the Sensex has gained 527.46 points from a low of 5,033.69. The S & P Nifty crossed the 1700 market and closed at 1733.65.

The undertone remains bullish on sustained inflow of funds in the market. While retail investors have been active, foreign as well as local funds have stepped up buying of late. FII inflows exceeded Rs. 100 crores for the seventh day in a row on Friday, taking the total for September so far to about Rs. 1,000 crores.

This has come after the net inflow of Rs. 2,892 crores in August. However the August figure included subscriptions to the TCS IPO. FIIs were allotted 2.42 crores TCS shares worth Rs. 2,057 crores.

Operators expect foreign funds buying to continue on the back of sound economic fundamentals and strong demand in various sectors. The monsoon has been better than earlier anticipated and expectations have started building up over the July-September performance of the corporate sector. While a correction is not ruled out after the recent gains, the medium-term outlook remains optimistic.

In sector specific, buying was seen across both old and new economy stocks except technology shares. In stock specific action, index heavyweights Reliance moved up to Rs 509.25, ITC to Rs 1174.10, ONGC to Rs 746.40 and Hind Lever to Rs 125.75.

Auto major Tata Motors gained 4.35 per cent to Rs 405.75 following the company's announcement that it expected to list its ADRs on the New York Stock Exchange.

Though the hike in banks' cash reserve ratio was meant to rein in inflation, market players rule out any immediate hardening of interest rates because of the ample liquidity in the system.

Bank shares were in demand on merger prospects prompted by declining profitability of many banks. State Bank of

India was firm at Rs 480.50, Bank of Baroda at to Rs 185.05, Punjab National Bank to Rs 272.30 and HDFC Bank at Rs. 402.45.

Power pivotals Tata Power improved to Rs 302.65 and Reliance Energy to Rs 635.40.

Pharma stocks traded firm . While leading pharma companies are outperforming the generics market growth, others are gaining hold in the API market in developed countries. With the huge generics opportunity, they may see their topline expanding rapidly in the coming quarters.

Ranbaxy witnessed buying interest on reports of tentative approval from the U.S. Food and Drug Administration for manufacture and marketing of its Fosinopril sodium and hydrochlorothiazide tablets.

Wockhardt was in the limelight on reports of a board meeting on September 21 to consider and approve the issuance of bonds/GDRs/ADRs/convertible debentures in domestic/international markets. On Friday, the company informed BSE that it had launched an issue of Foreign Currency Convertible Bonds (FCCB) of $100 million. Zee Telefilms attracted renewed interest after the company said it was not making fresh bids for cricket telecast rights.

Interest rates higher

Interest rates ended higher as compared to the previous week. The ten year government security was traded at 6.10 per cent and the five year security at 5.88 per cent.

The year on year inflation was came down to 7.81 per cent for the week ended September 4.

Rupee gains

The rupee gained 39 paise against the dollar during the week .

It closed at 45.87 against 46.27 in the previous week on the back of sustained strong trade and foreign capital inflows though hectic dollar demand from corporates and importers limited the gains. Staying away from the forex spot trading was yet another move by the Reserve Bank of India to douse inflationary pressures.

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