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Tuesday, Jul 27, 2004

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Rally continues despite GTB crisis

Shanthi Venkataraman

THE market rally continued into this week, even as the issue with Global Trust Bank threatened to play spoilsport. While the stocks of private sector banks took a beating, stocks of oil and auto companies found favour with the markets.

The Sensex crossed the 5100-mark, ending the trading session at 5118 points, 45 points or 0.88 per cent higher than the previous closing of 5073.34 points. The S&P CNX Nifty closed the day higher by 16 points at 1618.

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Fears surrounding the crisis with Global Trust Bank had a dampening effect on the early trading session.

The Sensex opened weak at 5046 points. However, the benchmark index soon rebounded, driven by buying in index heavyweight ITC, which has a weightage of six per cent in the index, as well as a spurt in prices among notable oil sector stocks.

Among the index constituents, 19 stocks advanced, while 11 declined. Gains were witnessed predominantly among large-cap stocks. The stock of ITC gained more than five per cent, possibly driven by expectations of good earnings numbers. The company would be declaring its results on July 30. Other major gainers include Reliance, Tata Steel, Tata Motors and HPCL.

Banking stocks: Banking stocks, particularly that of private sector banks took a beating on Monday. The Reserve Bank of India had announced a three-month moratorium period for Global Trust Bank. Investors would be allowed to withdraw only up to Rs 10,000 on their deposits. This caused panic among depositors with the bank and also among investors. The stock of Global Trust Bank tanked 20 per cent touching the lower circuit filter. The SEBI is to closely watch the movement of the stock to ensure that there are no manipulative practices.

The proposal to merge Global Trust Bank to Oriental bank of Commerce saw the stock of the latter rise by 1.65 per cent to close at Rs 267.20. Oriental Bank, which has a presence mainly in the North, would gain from the additional branches. The shareholders of Global Trust would, however, not receive any share of Oriental Bank, as a part of the merger.

Some of the negative sentiment did spill over to some of the other private banking sector stocks such as Centurion bank, IDBI bank, ING Vysya Bank and J&K Bank.

A slew of results announced by banks ensured that certain stocks either gained or remained stable, even as other banking stocks were hit. The stock of Kotak Mahindra Bank and Vijaya Bank remained stable following the announcement of its results for the quarter ended June. The stock of Federal Bank, however, fell by Rs 2 to close at Rs 305.95, despite posting good results.

Oil companies: Stocks of national oil refining companies gained, fuelled by the Government's decision to grant them freedom to fix petrol and diesel prices and revise them every fortnight within a band of 10 per cent.

The stocks of Bongaigaon Refinery, BPCL and IOC gained about five per cent. Other stocks that gained include Chennai Petrochemicals, HPCL, Kochi Refineries and ONGC.

Announcement of results: The results of Maruti Udyog were announced on Monday. The increase in profits was attributed to increased sales of its Alto and WagonR. The results pushed the stock up by Rs 5 or 1.4 per cent to close at Rs 431.35. The stock of Tata Motors also gained on the back of expectations of good earnings.

The stock of Dabur gained Rs 1.15 to close at Rs 71.15, following the announcement of its results. The company has nearly doubled its profits for the quarter ended June.

The stock of Raymond gained marginally, even as the company reported a fall in profit. The fall was, however, as a result of a foreign exchange transaction which was affected by the strengthening of the dollar.

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