The Hindu Business Line : Mid-caps, pharma and tech stocks gain

IT was an extremely volatile trading session as the results of the Lok Sabha elections unfolded. The Sensex nosedived close to 200 points in just minutes after the markets opened. The early indications that the BJP-led NDA will not form the Government sent uncertain waves in the market. The Sensex, however, started moving upward in the mid-morning session.

Despite the slightly surprising outcome of the elections, the market closed in the positive territory. After being banged for the past three days, the markets have, probably, already discounted a hung parliament. Only PSU stocks had a strong negative impact. Rest, such as technology, pharma and a number of mid-cap stocks, attracted interest.

PSU stocks were pulped on fears that the change in the Government could slowdown the process of reforms. The BSE-PSU lost 2.77 per cent. PSU stocks opened on an extremely weak note and recouped in the mid-trading session; but could not contain the gains. The index traded at a wide range of 296 points.

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Rashtriya Chemicals, which was lined up for divestment suffered the most losing 15 per cent followed by MTNL and HPCL. Indian OIL, NALCO and Neyveli Lignite were few other stocks that lost in excess of 4 per cent. SAIL, however, gained 1.8 per cent.

Bank stocks, though they withstood the initial jolt, started losing steam towards the end of the trading session. Among banking stocks, Corporation Bank and Allahabad Bank withstood the onslaught. Private sector banks such as ICICI Bank, HDFC Bank and Kotak Mahindra Bank remained stable.

Technology and pharma stocks were the star performers during the day. As investors unwound positions in PSU and bank stocks, these sectors started gaining interest.

Pharma stocks, considered to be defensive, too were among the top gainers. Aurobindo Pharma, Cadila Healthcare, Wockhard and Nicholas Piramal gained. Top rung pharma and technology stocks such as Satyam, Wipro, Infosys and Ranbaxy too bucked the broad market trend insulated from the political events.

Interestingly, the mid-caps continued to attract interest as suggested by the higher rise in the CNX Nifyt Midcap index. The index gained 0.83 per cent while the S&P CNX Nifty rose only by 0.37 per cent.

Some of the top gainers were Apollo Hospitals, Vaibhav Gems, Dewang Housing, Kesoram Industries and Century Textiles.

Ingersoll-Rand was a surprise gainer. The stock gained 4 per cent to Rs 225. Volumes too were higher. The stocks had been out of favour for a long time after poor performance in the December 2003 quarter.

Stocks of Reliance group companies such as Reliance Industries, Reliance Energy and Reliance Capital were in the limelight during the mid-morning session. Reliance Industries gained 2.8 per cent pulling up the index despite a heavy loss in PSU stocks.

Power stocks such as Tata Power and Reliance Energy gained. These stocks have been dipping over the past few days and investors seem to be picking up at lower levels.

Shares of OCL were up 7.4 per cent after the company announced a 100 per cent dividend. The stock closed at Rs 341.

Bharti Tele spurted on reports that the company was planning to buy Idea Cellular. The stock gained 4 per cent to Rs 160.

Tata Teleservices too gained 5.7 per cent Rs 23.35. Traded volumes doubled in the counter.

Some of the more prominent losers other than that indicated by the main indices were Kalyani Brakes, Madras Fertiliser, Gujarat State Fertiliser, K Sera Sera Hindustan Organic Chemicals Hindustam Copper, Petron Engineering Texmaco, Balrampur Chini, Brittania and Moser-Baer.