The Hindu Business Line : Oil, cement cos sparkle in broad-based rally

AFTER the knock they took on Wednesday, the markets staged a smart comeback , with the benchmark BSE Sensex gaining as much as 85.37 points to end at 5,123.65 points. The Nifty put on 27.40 points to breach the 1,600-point mark and settle at 1,609.20 points.

Stocks belonging to the oil refining and marketing sector were at the forefront of the rally; cement, steel and paper sector stocks were also in the limelight on a day when the undertone was distinctly bullish.

Click here for table

Underscoring the positive trend was the fact that out of the 30 stocks in the Sensex, all but three of them ended the day in positive territory, with one stock remaining unchanged. The news of the imminent listing on TCS did not appear to have an impact on other technology stocks within the Sensex. Infosys (which, incidentally, contributed the most to the rise in the Sensex), Wipro and Satyam Computer ended the day posting neat gains.

The rally on Thursday also embraced in its wake stocks that have been ruling weak in the recent past: Hindustan Lever, Ranbaxy and Bharti Tele-Ventures.

The Government's decision to cut customs and import duties on petrol and diesel had a salutary impact on the prices of oil refining and marketing companies such as Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd.

BPCL posted the highest gain of the lot, gaining close to six per cent to finish at Rs 343.7. However, the same slickness in price movement was not to be seen in the case of standalone refiners such as Kochi Refineries and Bongaigaon Refinery, both of which ended the day in the red.

Cement stocks across the board - from the highly profitable Gujarat Ambuja to companies in the red such as Prism Cements and Mangalam Cement - witnessed enhanced buying interest. Expectations of continued firm trends in prices and better demand in the wake of the revival in the monsoon appear to have triggered the rally. The star performer within this sector was Madras Cements, which was up by about Rs 50 (a rise of about 7 per cent). There have been several occasions when these factors have pepped up cement stocks, only for them to lose steam subsequently. The focus would be on whether the cement stocks could build on the gains in Thursday's trading.

Trading in steel sector stocks was on a terrain that has become common over the past few months. Even on days when they shed value, they have dominated the trading charts in terms of volumes. In Thursday's trading, steel stocks witnessed considerable buying interest and ended with gains. SAIL was among the prominent gainers in the Nifty with trading volumes of 38 million shares on the NSE.

Yet another sector where there was a secular upward trend was paper. Sentiment for stocks from this sector, which had been languishing, appears to have improved with expectation of improvement in prices. The likes of Tamil Nadu Newsprint, Seshasayee Paper and Ballarpur Industries, to name a few posted gains.

Balaji Telefilms shed value with the markets unimpressed by the pricing of stake sale to the Star group and resultant open offer. The company is offering a 25 per cent stake at a price of Rs 90 per share through a preferential offer of equity and warrants. The open offer for an additional 20 per cent would be at the same price. The positive long-term implications appear to have been buried by the disappointment over the pricing of the deal.

Other gainers were Hyderabad Industries, Subash Projects, Precision Wires, Jay Bharat Maruti, Murudeshwar Ceramics, Apollo Tyres, ING Vysya Bank, Great Eastern Shipping, Classic Diamonds, Eimco Elecon and Mukand. Prominent losers were Infomedia India, IDBI, Crisil, Sintex Industries, Radaan Media Networks, Mid-Day Multimedia, Searle, Sandesh and Sundram Fasteners.