The Hindu Business Line : Mid-caps maintain momentum; techs slip

CAUTION is the word in the market. With a number of uncertainties such as a possible interest rate hike, monsoon and the impending Budget, the mood appears to be cautious as is clear in the extreme volatile trading.

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However, some buying support seems to be coming in specific stocks and sectors. The main trend in the past few trading sessions has been selective buying in mid cap stocks. The trend continued on Tuesday too.

Select buying is also evident in corporate that have declared good dividend and earnings numbers. The big boost in confidence is yet to come in.

The meteorological department has predicted normal monsoons. If it proves true, this could be a major boost to the markets. Select auto stocks such as Maruti, M&M and Hero Honda have been inching up slowly but steadily. Interest rates too would be a major factor for any fillip in these stocks.

The broad market trends appear to be turning positive. Traded volumes and turnover have improved in both the exchanges. The market breadth too is turning positive - the number of advancing shares has been exceeding declining shares over the past few days. The combined turnover at the NSE and BSE rose 22 per cent and the volumes too were on the higher side on Tuesday.

The advances to decline ratio was positive with 438 stocks gaining and 272 stocks losing on the NSE. This suggests that though number of small and mid cap stocks were on an upmove, the subdued trend in a few top rung stocks is responsible for the overall flat market.

The BSE Sensex gained for the fourth straight day, but the upmove was marginal on Tuesday and also extremely volatile. The markets opened on a positive note and continued to move up till mid-day. The later half witnessed some selling pressure pulling down the indices. The last half an hour picked up some interest and the markets closed marginally above the previous close.

The mid caps were clear gainers once again. Stocks such as Philips Carbon, Opto Circuit, Gujarat State Fertiliser, Sintex, IDBI, GE Shipping and LIC Housing Finance were some of the major gainers.

The primary losers were banks and technology stocks. Satyam and Wipro primarily pulled down the technology stocks. New rule for visa renewals by the US for Indians could have dampened sentiment in technology stocks. The tech stocks have been the sole gainers over the last month outperforming every other sector.

The other technology stocks presented a mixed trend. NIIT (7.8 per cent), HTMT ( 3.4 per cent), i-flex Solutions (2.6 per cent), Hughes Software (1.3 per cent) were the major gainers. NIIT has declared a dividend of Rs 5 per share. The dividend yield works out to close to 3 per cent. NIIT stock gained close to 8 per cent propped up by the dividend announcement.

KEC International has bagged a Rs 350-crore order from Abu Dhai. The stock rose 7 per cent and volumes rose four-fold.

The petroleum sector stocks too showed a good show. Both top companies and mid cap companies attracted buying interest. BPCL, HPCL, IPCL, Chennai Petroleum and Bongaigaon Refinery remained firm on petroleum price hikes.

The steel sector stocks too continued to remain firm. Tata Steel and SAIL were the major gainers, gaining close to 3 per cent.

IndusInd Bank announced a bumper dividend taking the total dividend for the year to 225 per cent. A good dividend and impressive results propped up the share price. The stock closed at Rs 58, up 3.5 per cent.

FMCG stocks such as Colgate, Dabur and HLL remained firm. Colgate declared an interim dividend for the year.

Among mid caps, some of the top losers were Kalyani Brakes, Eveready Industries, Malwa Cotton, TVS Motors, Jaiprakash Associates, Valecha Engineering, Dal-Chi Karkaria, K Sera Sera, Alstom Projects, IPCA Labs and Revathi Equipment.