Financial Daily from THE HINDU group of publications
Tuesday, Aug 24, 2004
Financial Daily from THE HINDU group of publications Tuesday, Aug 24, 2004 |
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Stock Markets Markets - Commentary Columns - Sensor Steel majors' move fails to cut ice in bourses Shanthi Venkataraman
THE markets began the week on a negative note, as rising inflation continues to haunt investors. Even as steel majors announced price cuts to temper the rise, market players reacted by selling steel stocks. The stocks of index heavyweights Tata Steel and SAIL on Monday bore the brunt of the selling pressure. There was, however, buying activity in select cement and technology stocks. The BSE Sensex declined for the second consecutive trading session, closing at 5033.69, 31 points or 0.61 per cent lower than its previous close. The Nifty fell by about 12 points to close at about 1578 points. The Sensex opened on a flat note and witnessed an uptrend for a brief period. It subsequently slid into the negative territory. It did manage to inch up to its previous closing level of 5064. However, reports of price cuts by other steel players, such as Essar Steel, drove it back into the negative territory. For every two stocks that advanced, three declined. The stocks that managed to post gains in spite of the bearish trend, include the stocks of HDFC Bank, Hero Honda, HLL, Reliance Energy and Zee Telefilms. The stocks of HLL and Zee Telefilms gained more than 3 per cent. Besides steel stocks, the stock of SBI also took a beating along with a few other banking stocks, on the back of inflation fears. The only indices on the BSE to register gains were the BSE FMCG index, BSE TecK and the BSE IT index. Steel stocks lead the fall: Steel stocks appear to be hit with more bad news. The stocks belonging to the sector declined on Friday, following news of import and customs duty cuts. They did not have much time to recover, with steel major Tata Steel announcing a price cut of Rs 2000 on its products. The company's decision to maintain the price until March 2005 hardened the blow, as this comes at a time when input costs appear to be on the uptrend. Other steel players such as Essar Steel, Jindal Steel and SAIL quickly followed suit, though the cuts in prices were to a lesser extent than that announced by Tata Steel. The stock of Tata Steel fell by nearly 6 per cent to close at Rs 245.15, while the stock of SAIL fell even more sharply by about 7.06 per cent. Selective buying in cement and tech stocks: Cement and tech stocks managed to figure in the gainers list. The stock of Gujarat Ambuja was a prominent gainer, but most of the advances were witnessed among the smaller cap stocks. Stocks of Chettinad Cement and Birla Corporation also made the list of prominent gainers. Tech stocks were also in the upswing, with the BSE IT appreciating 0.50 per cent, even as most other indices turned negative. The stocks of Infosys, Wipro, Hexaware Technolgies, Hughes Software, Tata Infotech and Tata Elxsi were notable gainers. Company news and stock reactions: The following were the reactions by the stock markets to company announcements. The stock of Kirloskar Brothers gained Rs 18 to close at Rs 497.45, on the back of its bagging an order worth Rs 39 crore from NTPC. The stock of e-Serve International gained smartly by Rs 30 to close at about Rs 960. Citigroup has revised its offer for the shares of the company, from Rs 800 to Rs 975. The stock of e-Serve would be delisted as the public shareholding is now less than the prescribed shareholding. The stock of JK Paper gained Rs 0.65 to close at Rs 41. This could be on the back of the company's declaration of a 4 per cent dividend for the year June 2004. The stock of Ranbaxy, however, fell by Rs 3 to close at Rs 927. This was despite the positive development that the company had received approval from the USFDA to manufacture and market Loratadine, an oral solution.
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