The Hindu Business Line : Mid-cap, IT indices fare better

THE markets seem to be taking a breather after a hectic run-up in the past couple of weeks. After touching the all-time high for the second time during the twelve-month period, the Sensex stocks appear to be taking a break.

The popular buying themes of the last couple of weeks appear to be fading, as profit booking also happens at regular intervals. On Tuesday, large caps and banking stocks took a momentary breather and IT and mid-cap stocks fared better. The IT and mid-cap indices underperformed the broad indices last week. These stocks were back in favour during the day. Select textile stocks too shed gains of the past few days on profit booking. Specifically, stocks of second rung textile companies dipped.

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The Sensex closed marginally lower 6316.28 points, a fall of 6.22 points. The Nifty closed flat at 1992.70 points, just 0.45 points lower. The advances to declines ratio was more balanced. While 377 stocks advanced, 407 stocks declined on the NSE. On the NSE, the CNX Midcap 200 and the CNX-IT index outperformed the broader indices. The market capitalisation at the NSE stood remained stable at 14.76 crore shares compared to Friday.

The trading pattern in 2004 has been different from 2003, when the markets witnessed an across-the-board rally. The 2004 rally has been dominated by different sector-specific themes catching the market's fancy at different time intervals.

The IT rally in the early part of the year was followed by solid strength in mid caps, which lasted for three to four months. Large caps and banking stocks were either dormant or edging up at a snail's pace for most of this season when all the action was centered around mid cap stocks. Inspired by strong FII inflows, the large cap stocks witnessed hectic buying interest, taking the Sensex to a new high.

Bank stocks are taking a breather after a sharp run-up over the past three weeks. Most PSU banks have gained in excess of 20 per cent during the three weeks. IOB was the only PSU stock to buck the general trend. The stock gained 5 per cent during the day. PNB and Oriental Bank were the major losers among Sensex stocks, losing in excess of 3 per cent.

Other banking stocks that shed value were Canara Bank, Vijaya Bank, Bank of Rajasthan, Dhanalakshmi Bank, Bank of India and J&K Bank. Among the private sector banks, Kotak Mahindra Bank shed close to 4 per cent, while ICICI Bank and HDFC Bank remained steady.

Select engineering stocks such as Voltas, Esab India, Ador Welding, BEML, HMT, Veejay Lakshmi, Thermax, Orient Abrasives and Praj were remaining strong. Stocks in the mining sector such as Gujarat NRE Coke, Sesa Goa and GMDC too were strong gainers.

PSL, MM Forgings and Surya Lakshmi Cotton Mills witnessed substantial buying on the back of stock-specific news. The management of MM Forgings is to consider a bonus issue. The stock shot up 20 per cent to close at Rs 322. PSL announced that it received a $25-million export order, sending the stock up 4.2 per cent to Rs 162.8. Surya Lakshmi Cotton Mills announced its capex plans for Rs 20 crore, which will be entirely funded through internal accruals. The stock was up 5.3 per cent at Rs 112.25.

Some of the mid-cap stocks that rose sharply, accompanied by a huge rise in traded volumes, were Godrej Industries, Sabero Organics, Hindustan Spinning and Weaving Mills, Texmaco, EMCO, Exide Industries, Bharat Rasayan, Andrew Yule, Ashima, Agro Tech Foods, Sabero Organics, Balmer Lawrie, Tata Finance and Cholamandalam Investments.

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Mid-cap, IT indices fare better