The Hindu Business Line : Interest in index stocks perks up market

AFTER a sharp decline on Monday, the markets picked up as index stocks attracted buying. The Sensex opened on a weak note and remained volatile during the day.

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The last one-and-a-half hour, however, saw some buying activity that pushed the index into the positive territory. The Sensex was up 36 points, closing at 5,734.44, while the S&P CNX Nifty gained 13 points and closed at 1,821.35.

The advance to decline ratios indicated a contradictory trend in the large caps and the overall market. This means that though Sensex and Nifty stocks were bullish, other mid-cap and small-cap stocks were largely bearish.

Among the Sensex stocks, 19 advanced while only 11 declined, implying a largely bullish sentiment among the large-cap stocks.

A similar behaviour was observed in the Nifty as well. The broad market trend, however, was bearish as more than half the stocks traded declined.

The index heavy weights such as ITC, SBI, Tata Steel and L&T gained. Infosys Technologies dipped marginally. Other large-cap stocks that declined include HDFC, Grasim and ICICI Bank.

L&T gained 4.61 per cent and was among the top gainers of the Sensex.

The company has won an order from ONGC worth Rs 1,006 crore to build nine oil platforms that will help boost oil output from the Bombay High south rig by 2.15 million tonnes per year and gas production by 3.87 million cubic metres per day.

Considerable activity was seen in the auto and banking sectors. Two-wheeler stocks such as Hero Honda and Bajaj Auto witnessed a sharp spurt. Banking stocks, particularly PSU sector banks, did well. J&K Bank fell 7.12 per cent despite declaring an interim dividend of Rs 5 per share.

After a sharp dip in PSU banking stocks the day before, punters appear to be buying at lower levels in these stocks. Mid-cap banking stocks such as Bank of Baroda, Bank of India, Vijaya Bank and IOB witnessed a sharp surge. Bigwigs such as Corporation Bank, SBI, and HDFC Bank too were in the limelight. PNB gained close to 3.5 per cent.

It was a mixed bag for the top-rung tech stocks. While Infosys and Wipro slipped, Satyam gained. Among the telecom stocks, VSNL, MTNL and Tata Telecom gained while Bharti Tele slipped marginally. VSNL continued its upward trend and gained 7.4 per cent.

Steel majors had a reason to cheer. Following a series of price hikes, steel majors announced yet another hike recently. This perked up interest in stocks such as Tata Steel, SAIL and Essar. Tata Steel gained Rs 12.15 to close at 443.7. Jindal Steel remained flat.

Mid-cap pharma companies such as IPCA, Lupin Chemicals, Matrix Laboratories and Orchid Chemicals were among the gainers. These stocks have risen manifold during the 2003 rally and continue to attract investor attention. Divi's Labs, which has risen over 10-fold since its IPO last year, however, showed marginal weakness. Aurobindo Pharma remained flat. The company had obtained an approval to foray into the markets in UK.

Sterling Biotech gained Rs 2.45 after it announced that its net profits have more than doubled. The stock closed at Rs 130.55.

Reliance Energy touched a new high of Rs 714 for the second straight day after it announced a preferential offer at Rs 640 to Reliance. The heat in the stock could also be on news reports that an FII has picked up a substantial stake in the company at Rs 650 levels.