The Hindu Business Line : Markets bounce back, large-cap stocks hog limelight

ON Tuesday, large-cap stocks recovered more than what they lost on Monday as stock prices bounced back. Sensex, which briefly slipped below Monday's close on opening, did not stay down for long. At close of trade, Sensex gained 197 points wiping out the loss of 171 points suffered on Monday.

Mid-cap and small-cap stocks were not that lucky. Mid-cap indices, which lost more than Sensex on Monday, gained less than two per cent. Sensex, however, gained 2.17 per cent. In terms of sectors, oil & gas and banking sector stocks gained the most.

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Reliance Industries led the rally in large-cap stocks. Even as confusion abounds regarding implications of the impending demerger for traders, Reliance Industries stock vaulted 4.1 per cent. The stock reacted to news that the promoter group is not only transferring shares intra-group but is also consolidating its hold through creeping acquisition.

Other large-cap stocks to gain include BHEL, Reliance Energy, Satyam Computer and Tata Motors. From the mid-cap space, Kirloskar Oil Engines, 3i Infotech, Godrej Industries, Scandent Solutions and Madras Cement gained more than eight per cent.

In terms of news-driven action, a number of companies disclosed plans to mobilise capital. Response to such plans were, however, mixed. Stocks of Centurion Bank of Punjab and Suryalakshmi Cotton barely responded to the announcement made after close of trading on Monday.

The stock of Mercator Lines in contrast rose three per cent as the company had also announced a bonus offer apart from plans to expand the capital base. News of offer of equity by GIC Housing and Raj Rayon, in contrast, met with lukewarm response. Both stocks lost value on a day in which nine out of ten stocks gained in value. Igarashi Motors, which has also come out with a preferential allotment of shares, gained 1.5 per cent, under performing the indices. Markets, however, lapped up capital raising plans from Asian Electronics. The stock surged five per cent. Matrix Labs, which has announced forays into China and South Africa gained seven per cent.

More than a few open-offer related price action was also on display on Tuesday. Stocks of Unitech, FCI OEN Connectors and Winro Commercial firmed up in the backdrop of open offer announcements. The going for acquirers in Unitech and FCI OEN Connectors may not be smooth as the open offer price is now below the prevailing market price. The stock of Cholamandalam Investment fell three per cent. DBS Bank of Singapore has succeeded in acquiring 20 per cent through the open offer made earlier this year.

Changes in institutional shareholding also sparked price action. Stocks of NDTV and Astra Microwave surged as shareholding of institutions changed. In NDTV, a foreign institutional investor had acquired further shares whereas in Astra Microwave, a venture capital investor trimmed his stake. The stock of Everest Industries was down even after Franklin Templeton announced that it had acquired a large stake. Acquisition, it appears, was possible only with the promoter ACC paring down its existing holding. The stock of Welspun Gujarat Stahl Rohren also remained subdued as Goldman Sachs stake increased after conversion of bonds into equity.

Prominent losers include HDFC, HDFC Bank and ONGC. Stocks of Rashtriya Chemical Fertilisers and National Fertilisers also lost value. These stocks had firmed up yesterday on the back of reports that Government was planning to disinvest a part of its stake. The stock of Mukand, in which the Rahul Bajaj group pared its stake in favour of another joint promoter, also logged declines. Trading in tyre stocks - MRF and Apollo Tyres - also remained subdued. Stocks of NELCO and ICSA India, small-cap stocks that have registered large gains in recent months, also lost value.