Massive FII buying buoys bourses
A BULLISH sentiment prevailed on bourses last week and the market witnessed heavy purchases by institutional investors, domestic operators and local mutual funds. A fresh rally in blue chip stocks was seen in addition to renewed buying interest across all counters. Speculators who had squared up their positions ahead of the expiry of futures and options contracts on September 25, turned buyers on Friday. Pharma, automobile and commodity stocks attracted buying by FIIs. Old economy stocks such as steel, cement and paper attracted renewed buying after the recent fall from higher levels.
The BSE benchmark 30-share index touched a low of 4111.54 before rebounding to end the week at 4382.57 against the previous weekend close of 4217.12, a net gain of 165.45 points.
Foreign institutional investors made net purchases for Rs. 420 crores in the first four sessions of the week. Domestic mutual funds too were aggressive buyers and made net investments of Rs. 331 crores in the same period. FII investments have risen to a record Rs. 3,906 crores so far this month, the highest for any month. Cumulative net FII investments as on September 25 were Rs. 18,185.6 crores, the highest so far in a year since FIIs started investing in the Indian secondary market.
Following the Government announcement that it was considering various options on the issue of privatisation, after the adverse Supreme Court verdict, HPCL and BPCL stocks turned firm. Among other PSE stocks, ONGC rose on fresh accumulation in anticipation of impressive results. The company's board has decided to submit a formal proposal to the Ministry of Petroleum and Natural Gas expressing its intent to acquire the entire shareholding of HPCL (29.71 crore shares, being 16.97 per cent of the equity capital of MRPL) at about Rs. 37.75 a share worked out on the basis of a pricing mechanism decided by the Ministry on September 18. Further, the board has decided that as of now MRPL should remain a subsidiary with management control under the ONGC.
The board of directors of Shipping Corporation of India will meet on October 3, to consider declaration of an interim dividend for 2003-04.
IPCL was firm on reports that Reliance Industries is considering hiking its stake in the company to 51 per cent. The Gas Authority of India went up on reports that Royal Dutch Shell had offered a 15 per cent equity stake to the company in an offshore gas exploration field in Egypt.
Refinery stocks such as Bongaigaon Refinery, Chennai Petroleum and Kochi Refineries were also in demand. MRPL gained ground after ONGC decided to up its stake in the company.
Some recovery in PSE scrips may be seen in the coming week as the meeting of the Cabinet Committee on Disinvestment (CCD) is scheduled next week.
In the steel sector, Tisco and SAIL bounced back. Tata Steel edged up on renewed buying after the leading steel producers said they expected domestic steel prices to soar in the coming months. Global prices are likely to firm up in the next quarter. Shares of SAIL jumped on Friday on sustained institutional interest after the company said it was well on track to maintain its pace of improvement in operational performance during the current financial year at 6-7 per cent, the rate achieved in the last fiscal year. Stating this at the annual general meeting, the Chairman added that the company "is continuing firmly on the turnaround path".
Hindalco Industries announced that Birla Mt Gordon Pty Ltd, a wholly owned subsidiary of Birla Mineral Pty Ltd, itself a wholly owned subsidiary of Hindalco, has entered into a sale & purchase agreement (SPA) for acquisition of a mining asset known as Mt Gordon Operations in Australia. It is the group's second copper mine in that country. The acquisition was for a gross consideration of A$ 21 million is expected to be completed by October 31.
In the cement sector, Gujarat Ambuja, Grasim, ACC and L & T were up on selective buying after reports indicated that cement prices in Mumbai could go up by Rs. 12 a bag, with cement manufacturers announcing a hike of Rs. 6-12 a bag post monsoon in the northern and western markets.
Madras Cements has announced that its has fixed November 14 as the record date for the purpose of sub-division of its equity shares of Rs. 100 into 10 shares of Rs. 10 each.
In the power sector, BHEL and BSES ended firm on renewed buying after early weakness. Alstom Projects closed higher after it won an order from Balco for supply and installation of pollution control equipment. KEC International went up on reports that it had bagged two contracts worth Rs. 115 crores from Abu Dhabi Water & Electricity Authority for supply and installation of overhead lines.
IT bellwether Infosys Technologies and Wipro gained ground. Hexaware Technologies has entered into a partnership with IBM-Rational to develop competencies in Rational technologies and methodologies. As part of this initiative, Hexaware will be setting up a dedicated centre of excellence in its offshore development centre at Chennai.
HCL Infosystems went up after the announcement of its impressive fourth quarter and 2002-03 results. Moser Baer India stock was in demand after it announced a bonus issue in the ratio of one share for every equity share held.
Automobile pivotals, Tata Motors, M & M, Hero Honda, Bajaj Auto and TVS Motors ended with gains on renewed buying after the recent fall from higher levels. Tata Motors touched a new 52-week high.
Among pharma stocks, Aurobindo Pharma, Cipla, Orchid Chemicals, Glenmark Pharma, Divi's Laboratories and Cadilla Healthcare gained ground. On the other hand, Ranbaxy, Dr. Reddy's, Sun Pharmaceuticals and Wockhardt finished lower.
Among others, MTNL was up on some value buying.
Buying was also seen in Arvind Mills, GAIL, IOC and Syndicate Bank. On Tuesday, the NSE announced the inclusion of all these four stocks into the F&O segment from September 26. The BSE announced the transfer of nine scrips to trade-to-trade segment (each transaction, whether purchase or sale, has to be backed by delivery) from Friday. These include Global Trust Bank (GTB), Silverline Industries, Himachal Futuristic Communications (HFCL), Pentamedia Graphics (PGL), SSI, Kopran, GTL, Aftek Infosys and Lupin. After the announcement, all these stocks suffered heavy losses. However, some of them were in demand at lower levels.
Telecom scrips jumped after the Group of Ministers on Telecom, on Thursday, decided to recommend to the Cabinet to hike the foreign investment limit in telecom companies (from 49 per cent to 74 per cent), allow intra-circle merger of service providers, and replace existing licences with nationwide unified licences. Bharti Tele-Ventures was the biggest gainer among telecom stocks, as a hike in foreign investment ceiling would benefit the company the most.
The banking sector displayed a mixed trend. Select public sector bank stocks went up on buying support at the lower levels. ICICI Bank were in demand on hopes of improved results for the second quarter.
The market undertone remains cautiously optimistic amidst rising hopes of stronger than expected economic growth this fiscal. The announcement of second quarter performance of companies in the coming weeks will influence sentiment for some time.
Rupee firm
The dollar-rupee exchange rate has entered a zone of volatility. Confusing economic data from the U.S. do not give a firm indication of which way the dollar will move vis-a-vis other currencies. The uncertainty in the aftermath of the RIB redemptions clouds the picture regarding the rupee.
The Indian currency ended at 45.85/86 a dollar, sharply higher from the previous weekend levels of 45.9350/9450 after dropping to an intra-week low of 45.87/88, dragged down by hectic dollar demand after an initial spurt to 45.75/76.
Debt market steady
Interest rates were easy during the week. The 10-year government security was trading at 5.26 per cent and the 5-year security at 4.82 per cent, a slight fall as compared to the previous week. The Reserve Bank of India was accepting only part of the amounts offered under repo and that has cooled down the rates. The year-on-year inflation moved up to 4.29 per cent for the week ended September 26. The increase was mainly on account of hardening of prices of petro products.
- Our Bureau
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