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Tuesday, Aug 10, 2004

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Sensex recovers on fresh buying

S. Muralidhar

AFTER the weakness witnessed towards the close of last week and despite the fall in major indices globally, Monday's trading session at the Indian stock markets saw a strong upward move on the back of fresh buying support.

Inflation-related worries among investors that had pulled down the indices on Friday seemed to have abated as a strong wave of buying in select industry counters led to a surge in the indices from mid-session on Monday.

The jump in the major indices also seems to have bucked the trend amongst most of the major indices of the Asian, European and American stock markets, where news about potential terrorist strikes and not-so-healthy economic growth seem to have had a negative influence on the markets' performance.

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The pick-up in the pace at which the indices have posted gains during the last couple of weeks has also been influenced by the continued flow of strong quarterly corporate financial performance and the growing indication that the ruling Congress-lead coalition Government can be expected to be a relatively stable one.

However, there is still an undercurrent of hesitancy amongst institutional investors as regards the sustenance of the first quarter's financial performance by India Inc, since there is the nagging possibility of high inflation and increasing oil prices eating into the profits of the remaining three quarters.

Though the first half of Monday's session reflected the effect of a hangover from Friday's fall, the second half of Monday's trading session showed no signs of these issues worrying institutional investors.

Buoyed by the support, the benchmark Bombay Stock Exchange Sensitive Index (Sensex) leaped up quickly from the mid-session on Monday. The 36 points or 0.7 per cent increase in the Sensex was registered during the last two hours of the session.

The major gainers were from the banking, information technology, cement and automobile sectors.

The Sensex had touched an intraday low of 5,154 points, dipping to that level after opening in negative territory at 5,182 points. At close, there were 21 gainers to nine losers from the Sensex 30.

The major gainers from among the Sensex stocks were Infosys Technologies, ICICI Bank, Ranbaxy Laboratories, State Bank of India, Tata Motors, HDFC Bank Ltd, Wipro, Hindalco, Bajaj Auto, Bharti TeleVentures, Reliance Energy, BHEL, Hero Honda, Dr Reddy's Laboratories, Cipla, ACC, Gujarat Ambuja Cements, Tata Power, MTNL and Maruti Udyog.

The Sensex losers were Reliance Industries, ITC, ONGC, HDFC, Satyam Computer, Grasim Industries, HPCL and Zee Telefilms.

The index gain on Monday was also supported strongly by increases in the information technology stocks. The other gainers from amongst software stocks were HCL Technologies, i-flex Technologies, Hughes Software, e-Serve International, Polaris Lab and Macmillan.

Tyre stocks witnessed a strong rally on Monday on the back of continued rise in demand from the automobile sector and the possibility of manufacturers raising prices of their products to protect their margins in the wake of the increase in oil and rubber prices.

Amongst the tyre stocks that posted gains included MRF Ltd (up 10 per cent), Ceat (up over 4 per cent), TVS Srichakra and Goodyear.

However, Monday's session witnessed a fall in the prices of a few public sector undertaking stocks, because of which the BSE-PSU index was one of the few losers from the clutch of BSE special indices.

The stocks that lost ground included primarily the oil PSUs, SAIL, Mangalore Refineries, IDBI, Container Corporation, Chennai Petroleum and National Fertilisers.

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