The Hindu Business Line : Momentum eludes market; PSUs, banks shine

STOCK prices were unable to build on the momentum that had gathered over the past two trading sessions and key indices ended the day with losses. The BSE Sensex started the day with a notable gap over the previous day's close, but pivotals could never sustain those high prices. Prices remained range bound for most part of the day's trade only to be dragged down in the last half-hour.

Both Sensex and Nifty registered marginal decline compared to the previous day's close. Other indices such as Nifty Junior, BSE-200, CNX Midcap 200 and the S&P CNX 500 ended barely in positive territory.

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This was mainly reflective of the continued trading interest in a number of mid-cap stocks even as the number of shares that declined outnumbered the advancing shares. Trading volumes of Rs 4,000 crore on the NSE were much lower than that of Wednesday and significantly lower than the volumes recorded on the previous Thursday.

PSU's advance: Among star performers for the day were a number of public sector company stocks. Stocks such as Indian Overseas Bank, Chennai Petroleum and Neyveli Lignite recorded a notable rise.

The rise in stock price of Indian Overseas Bank can be viewed in the backdrop of reports that the bank may be merged with Punjab National Bank.

The stock of Chennai Petroleum was among a number of oil refining stocks that gained. The strong oil price and the meeting of the Cabinet Committee on Economic Affairs to deliberate on oil price revision appears to have improved sentiment for such stocks. The stock of Neyveli Lignite, Gujarat Industries Power and Power Trading Corporation rose on the back of the expected listing of NTPC on Friday.

Private banks surge: Stocks of private sector banks also attracted intense trading interest. Stocks of Karnataka Bank and Federal Bank rose sharply. Stocks of Karur Vysya Bank, IndusInd Bank, South Indian Bank, ICICI Bank and Kotak Mahindra Bank also registered gains. The strong momentum seen in a number of banking sector counters appears to be driven by a combination of expected increase in business volumes and the prospect of consolidation.

Healthcare gallop: Among the various sectoral indices, BSE's healthcare index recorded the most gains rising by 0.7 per cent. Firm trends in stocks of larger companies such as Nicholas Piramal, Sun Pharma, Dr. Reddy's and Ranbaxy helped the healthcare index inch higher.

Stocks of a number of smaller companies such as Gujarat Themis, Bharat Immunologicals, Natural Caps and Hester Pharma zoomed.

Stocks of MNC stocks, however, had a mixed day with Pfizer and Abbott advancing while that of Glaxo and Aventis registered declines.

Mid-cap watch: A number of mid-cap and small-cap stocks gained 20 per cent during the day. Stocks that rose in value accompanied by an increase in trading volumes include KTL Industries, Syschem, Royal Airways and First Leasing. Stocks of prominent firms such as Eicher, LG Balakrishnan, Videocon, Revathi Equipment and CESC also flared up.

Momentum stocks retreat: Stocks that retreated on Thursday include a number of stocks that had gained price momentum in recent weeks. Prominent among them were Blue Dart, KRBL, Monsanto, Kalpataru Power, Titan and Gujarat Mineral Development.

Cement and steel lose shine: Major losers also included cement stocks such as Grasim, ACC, UltraTech Cemco and steel stocks such as Tata Steel, SAIL and Jindal Vijaynagar. However, other metal stocks such as Hindalco, Nalco and Sterlite ended the day with gains. Similarly, cement stocks such as Gujarat Ambuja and Shree Cement suffered only marginal losses.