Financial Daily from THE HINDU group of publications
Thursday, Oct 07, 2004
Markets - Commentary
Columns - Sensor
Sensex falls into red; tech stocks rule weak
THE positive momentum seen in the indices over the past few weeks took a breather for the second day in succession. The benchmark BSE Sensex ended the day at 5713.75 points, registering a drop of 44.92 points; the Nifty shed 17.55 points to breach the 1800-point mark and finished at 1794.90 points.
Stocks belonging to the technology sector in the Sensex ruled particularly weak, in the run-up to the declaration of the September quarter results. Stocks belonging to the oil refining and construction sectors ruled firm in spite of the weakness enveloping the markets.
It also turned out to be a fairly volatile day as far as intra-day movements of the Sensex were concerned. The opening hours of trade saw considerable strength in the index, as a result of which it almost scaled the 5800-point mark (which also turned out to be the high for the day).
Weakness set in during mid-afternoon trades, after which the index not only gave up all the gains it had made during intra-day trade but also slipped into the red. Reflective of the bearish sentiment that was prevalent at the bourses, declines outpaced advances by a ratio of about 13 to 10 on the BSE.
Selling in the index constituents was pretty much across-the-board, with all but four stocks ending the day in negative territory. The price fall in the tech trio of Infosys Technologies, Wipro and Satyam Computer collectively contributed about 18 points to the drop in the Sensex. ITC and ONGC shed some of the gains made by them in recent trading sessions and so was the case with Tata Motors.
Pharma stocks, too, appeared to have developed a bout of weakness with Dr Reddy's, Ranbaxy and Cipla ending the day lower. Reliance, BHEL, Hindustan Lever and HDFC were the four stocks that ended the day in the black, the last named especially, moving up smartly by Rs 22.85 to finish at Rs 668.30.
Stocks from the banking space, which appeared to have regained momentum after several weeks of sluggish trends, retreated in Wednesday's trading. Corporation Bank, Canara Bank, Bank of Baroda, Union Bank and Indian Overseas Bank were among the prominent losers. The State Bank of India stock, too, ruled weak. The exception was UTI Bank, which closed the day with a gain of 3.8 per cent.
It was a day of divergent price trends in large-cap and mid-cap/small-cap information technology stocks. The weakness in frontline stocks did not hamper the bullish undertone in stocks such as Cranes Software, Aztec Software, Subex Systems and Nucleus Software, to name a few. Nucleus Software has continued its relentless upward trend and was one of the major gainers of the day. MphasiS BFL was a prominent loser ahead of the imminent earnings announcement.
On a day when the stocks of cement majors traded on a weak terrain, UltraTech CemCo, which now owns the cement business of Larsen & Toubro, witnessed a sharp spurt. The stock rose by about 10 per cent to end the day a tad below the Rs 300 levels. It also broke ranks with Grasim, which owns a controlling stake and with which a merger is expected.
The Grasim stock was among several large cap stocks that declined in Wednesday's trading. The other cement stock that rallied in the day's trading was Madras Cements, which continued its run of impressive gains over the past month-and-half.
Stocks such as Thomas Cook, Mercator Lines, Aban Lloyd Chiles, Vimta Labs and United Phosphorous maintained the momentum to notch impressive gains. The stock of Glenmark Pharmaceuticals took a breather. Vimta Labs has moved close to the Rs 700 mark in an unabated bullish phase that has seen the stock rise more than 25 times over the past 18 months.
Other prominent gainers included Mid-Day Multimedia, Amtek Auto, Tasc Pharmaceuticals, Hitech Gear, Balrampur Chini, SKF India, Raymond, Titan Industries, Saint Gobain Sekurit and Taj GVK Hotels. Notable losers were J K Industries, SB & T International, Rallis India, Mahindra Gesco Realty, Pearl Global, Reliance Capital, Eveready Industries, Essel Propack, Bharat Electronics and Patni Computers.
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