The Hindu Business Line : Significant surge in metal stocks

THE Sensex closed above the 6,500-point level for the second successive day ending at another all-time closing high of 6,563 points. Compared to the sluggishness seen in the index movement on Monday, stock prices of pivotals were on relatively firm territory on Tuesday.

Incidentally, for the second successive day, the Sensex ended the day with larger gains compared to the Nifty. The Sensex gained 0.77 per cent compared to Nifty's gain of 0.42 per cent.

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The day, however, belonged to mid-cap stocks. The CNX Midcap 200 gained 1.31 per cent and the Nifty Junior gained 1.25 per cent as select mid-cap stocks surged ahead. Nifty-Junior stocks that rose sharply in value include Tata Teleservices, Jindal Vijayanagar Steel and IFCI.

Trading volumes of about 70 per cent were concentrated in stocks outside of the Sensex. In particular, metal stocks had a field day with all the 12 stocks in BSE Metal index advancing. The index gained 4 per cent. Steel stocks led the rally although stocks of non-ferrous metal companies such as Hindalco, Nalco, Sterlite Industries and Hindustan Zinc too registered gains. The trading volume of about Rs 350 crore in the BSE Metal index stocks, nearly 15 per cent of the day's volume, was also significantly higher than what it has been in the past.

Steel sizzles: In steel, stocks of Jindal group companies flared up with Jindal Vijaynagar Steel gaining nearly 9 per cent. Apart from the 12 stocks in the BSE Metals index, stocks such as Ispat Industries, Essar Steel, Uttam Galva and Lloyds Steel rose in value. Reports of a possible hike in steel prices that are doing the rounds may have been behind the sudden price flare-up. Stocks of companies that are in industries allied to steel such as Vesuvius and Nava Bharat Ferro Alloys also stayed firm.

Capital goods gain: Capital goods stocks were the next best performers on Tuesday with 14 out of 16 stocks in the BSE Capital Goods index registering gains. Prominent gainers were Dredging Corporation of India, HMT and Gammon India. Capital goods stocks however account only for a small proportion of less than 2 per cent of the total market capitalization of stocks listed in Mumbai exchange.

Oil & gas warm up: Softening oil prices which are seen as reducing the subsidy burden helped India's oil & gas stocks to firm up on Tuesday. Oil prices have declined by about $3 according to news reports. Stocks such as HPCL, BPCL, IOC and Chennai Petroleum notched up gains. The stock of ONGC however declined. The stock, which traded ex-dividend, lost more than the value of the declared dividend of Rs 20 per share. The stock of Reliance gained 2 per cent.

News and stocks: News developments impacted stock prices of Gammon India, Sulzer India, Mid-day Multimedia, Tata Teleservices and Jaiprakash Associates. The stock of Gammon India gained 5 per cent in the wake of the announcement that the company has bagged an order for Rs 640 crore. The stock of Sulzer India spurted by 8 per cent as it declared its intention to enlarge the scale of operations.

The stock of Mid-day Multimedia spiralled up by 20 per cent. This was despite selling of sizeable stake by promoters of the company in the secondary markets. The identity of the buyers was however not disclosed. The stock of Tata Teleservices gained 10 per cent. The company has however categorically denied any plans for sale of stake or a merger with associate company, VSNL. The sale of a partial stake by GMO Emerging Markets fund had little effect on the stock price of Jaiprakash Associates. The stock gained 5 per cent.