The Hindu Business Line : Banking stocks in the limelight

THE indices were in positive territory for most part of the day, though bouts of selling pressure pushed them to the negative territory. Thanks to late buying in IT and banking stocks, the indices heaved up to end the day in the positive. The BSE Sensex ended the day with a gain of Rs 10.6 at 5535.69 points; the S&P CNX Nifty closed the day with marginal gains at 1749.85 points.

Among the index constituents, stocks that gained were Infosys, ICICI Bank, State Bank of India and Larsen &Toubro. Notable losers were Reliance, ITC and HLL.

HLL, which has a weightage of about 5.26 per cent in the Sensex, declined by about 4 per cent to close at Rs 144. Several block deals on Wednesday of more than one lakh shares depressed the share sentiment. Over the past three days the stock has lost over 8 per cent in value.

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The selling pressure has been on the back of the ongoing price wars between the FMCG major and P&G. Other FMCG stocks such as Godrej Consumer, Marico Industries and Nirma closed the day with losses, but P&G gained marginally to close at Rs 412.

Banking stocks were in the limelight with smart gains.

The sentiment towards this sector was boosted with the Hinduja's seeking approval from Foreign Investment Promotion Board to hike the FDI holding in IndusInd Bank to 60 per cent from the current 52 per cent held by them. The stock of IndusInd Bank rose by Rs 2.10 (6.10 per cent) to Rs 37.05. About 2.12 lakh shares were traded on the BSE.

This news seems to have raised the likelihood of a consolidation in this sector as across board gains in both private and public banking stocks was seen. Federal Bank was a major gainer; it gained about 12.8 per cent (Rs 35.05) to Rs 309.80.

ICICI Bank has about 20 per cent equity stake in Federal Bank; it had recently announced that it would be raising equity from the primary market to the tune of Rs 3500 crore.

Talks have been rife in the market that the raising of capital may be for acquisitions. In this backdrop, Federal Bank gained sharply to touch a new 52-week high of Rs 327.50.

Other gainers were IDBI Bank, UTI Bank, Punjab National Bank and Oriental Bank of India.

Notable losers that bucked the trend were Centurion Bank, HDFC Bank and Dena Bank.

Most of the other gains on Wednesday's trading were news driven. On news of the merger ratio of Burroughs Wellcome India and GlaxoSmithKline Pharma, both the stocks suffered.

The shareholders of former are to receive 14 shares of GalxoSmithKline for every 10 shares of Burroughs held. Following this news, Burroughs Wellcome fell by about Rs 60 or 6.98 per cent to Rs 790.15. The shares of GlaxoSmithKline declined by Rs 61.05 (9.69 per cent) to Rs 569.

Hinduja TMT rose by 3.9 per cent to Rs 211.95 on fresh buying after the company declared an interim dividend of Rs 5 per share (50 per cent) for FY 2003-04 amounting to Rs 20.45 crore.

Berger Paints gained 3.59 per cent to Rs 206.45 after the company's board approved the proposal to subdivide the face value of the company's equity share of Rs 10 each into a face value of Rs 2 per share.

In the F&O segment of the NSE, March contracts on NIFTY, Tata Steel and Reliance were the most active.

The March Nifty futures gained about Rs 6.20 to Rs 1751.85. Open interest increased by about 3 per cent.

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