The Hindu Business Line : Frontline stocks spearhead surge in indices

THE appetite for investment in the stock markets showed no signs of waning on Wednesday despite the tenuous movement of the indices during the previous three sessions.

The mid-week session witnessed another flood of buying support particularly in frontline stocks and pivotals, which led a surge in the major market indices.

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As a result of the sustained institutional buying the benchmark indices hit a new, all-time, historic high level at both the national-level stock exchanges. The bargain hunting amongst mainline stocks that was spearheaded by institutional investors was largely concentrated in stocks from the information technology, pharmaceutical, banking, automotive and commodity sectors.

While there were quite a few poor performers amongst mid-cap stocks, the numbers were overwhelmingly positive for stocks that are index constituents both at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Amongst the few stocks that lost value on Wednesday were the Reliance group companies and a few core sector companies from the cement and steel sectors.

At the BSE, the 30-share Sensitive Index (Sensex) leaped by over 76 points at close of the day's session, after touching an intra-day high of 6,423 points. The benchmark index opened the day at the lowest intra-day level of about 6,334 points. After that point the Sensex never looked back during the day, closing finally with a gain of over 1.21 per cent.

Wednesday's session was marked by the surge in confidence levels amongst investors. Right through the session, there were only two occasions when mild selling pressure seemed to threaten the gains that had been made. Out of the Sensex's 30 constituents, a total of 2.25 crore shares changed hands during the day. Total traded value of Sensex stocks stood at over Rs 919 crore and there were 26 gainers and only 4 losers during the day's trade. With Wednesday's close, the Sensex's price to earnings multiple stood at 19.48 times.

Reflecting a similar upbeat mood at the NSE, the 50-share Nifty index also closed after a strong showing at about 2,029 points a new all-time high for this index. This is an even more significant event since the NSE index had not breached its historic high along with the BSE's Sensex earlier last week.

Wednesday's session at the NSE saw the Nifty jump over its previous all-time high by a comfortable margin. As in the case of the BSE, sector specific stocks that posted gains at the NSE were also mainly in the IT, pharma and banking sectors.

Amongst the Sensex stocks that reacted upwards were Zee Telefilms (up over 11 per cent), Bajaj Auto (up over 3.5 per cent), Bharti TeleVentures (up over six per cent), BHEL (up almost three per cent), L&T up over 4.3 per cent), Maruti Udyog and Ranbaxy Laboratories (up over four per cent), Infosys Technologies, HLL and Hero Honda (all up about two per cent) and Cipla and Hindalco, which were both up over 1.5 per cent.

The other gainers from out of the Sensex stocks were HDFC, Dr Reddy's Laboratories, ONGC, ICICI Bank, Tata Steel, SBI, Tata Motors and Wipro. The losers were ACC, HDFC Bank, Reliance Industries and Reliance Energy. The performance of the Reliance companies at the markets still seemed to be under the influence of the ongoing spat between the two Ambani brothers.

Amongst the other stocks from the information technology sector that gained were Hexaware Technologies (up over 14 per cent), Polaris Labs (up over six per cent), i-Flex Technologies (up over 4.4 per cent), Hughes Software, HCL Technologies, Moser Baer, Mphasis BFL, Satyam Computers and Patni Computers.

The big gainers from the pharma sector were Glenmark Pharma, Divi's Labs, Lupin Lab, Nicholas Piramal, Aurobindo Pharma and Cadila Healthcare. The losers amongst Nifty stocks were Tata Chemicals, Steel Authority, GAIL, Colgate, Dabur. GlaxoSmithKline Pharmaceuticals and Shipping Corporation.