The Hindu Business Line : Markets reverse direction thanks to strong buying

MARKETS bounced back after the negative closing witnessed on Wednesday. Barring slight weakness witnessed towards noon, all the major indices other than the BSE Bankex ended higher.

The Sensex added 66.2 points or 0.6 per cent to close at 10110.9. Markets opened on a strong note on Friday. Momentary weakness resulted in profit booking pulling the Sensex to an intra-day low of 10057. The S&P CNX Nifty closed at 3027.5, up 18.6 points.

Mixed reaction in the Asian markets did not deter the optimism witnessed in the bourses. Confidence placed by overseas investors and domestic mutual funds may have added to the optimism seen in the market.

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In the basket of BSE 30, Ranbaxy Laboratories surged 6.5 per cent to Rs 432.7. Hindustan Lever, Larsen & Toubro and Hero Honda were other gainers in the index. Buying in Hindustan Lever can be attributed to the focus shown by Unilever on emerging markets; especially India. Overseas investors can now invest up to 49 per cent in the company. ICICI Bank, Bharti Tele Venture and Associated Cement, however, ended weak.

Mid-cap indices in the BSE and NSE closed higher. United Breweries Holdings surged 5 per cent to Rs 570.4. The company, which owns and operates Vijay Mallya's companies, plans to sell 74 per cent stake in United National Breweries of South Africa to the unit's management.

Patel Engineering added Rs 8.4 to Rs 433.8. The company plans to bid for independent mid-sized power projects based on hydroelectric power. Cranes Software and Assam Company were other stocks that closed in the green.

Pharma mid-caps sparkle: Pharma stocks in the mid-cap space witnessed some action. Aurobindo Pharma climbed Rs 4.5 to Rs 605.6. The company, through its UK-based subsidiary, plans to acquire UK drug maker Milpharm. This deal would be Aurobindo Pharma's first acquisition in Europe.

Sun Pharmaceuticals will demerge its drug research business into a separate company that will be listed in the stock exchange. The existing shareholders will get one share in the new company for each share held. The stock closed lower at Rs 787.8. Orchid Chemicals and Lupin were some of the stocks that made handsome gains.

Metals mixed: Metal stocks were a mixed bag. Nav Bharat Ferro, Jindal Stainless, Tinplate and Tata Sponge Iron closed in the green, while Mahindra Ugine and Hindustan Zinc ended lower. The board of Sterlite Industries approved a bonus issue in the ratio of one share for each held in the company. The stock declined by 1.5 per cent to Rs 1,443.

In the auto space, Tata Motors announced a 46-per cent increase in profits for the quarter ended December 2005. The stock however remained flat at Rs 753.8. Kinetic Motor Company rose 4.8 per cent to Rs 55.1. The company has announced plans to manufacture scooters in India along with Taiwanese two-wheeler manufacturer Sanyang Industry. Ashok Leyland, Hindustan Motors and Swaraj Mazda failed to weather challenges from the bear and closed in the negative ground.

Tea stocks continued their northbound journey on the back of shortfall in Kenya's production. Williamson Magor surged 20 per cent to Rs 71.5. Warren Tea, Jayshree Tea and Goodricke Group were other prominent gainers.

In the banking sector, Canara Bank stole the limelight with a surge of 10 per cent to Rs 263.5. Bank of India, Andhra Bank and UTI Bank also witnessed buying interest. Kotak Mahindra Bank and HDFC Bank declined on profit booking.

Other stock specific action

MTNL climbed 2.3 per cent to Rs 140.6. The company plans to offer national long-distance calls at a flat rate of Rs 1 per minute beginning March 1. Sesa Goa rose 1.6 per cent to Rs 1,041.6. The company will spend Rs 70 crore to buy four railway rakes to transport ore from its mines to ports.

Among the NSE constituents, VSNL, Aventis Pharma, Titan and Dishman Pharmaceuticals were prominent gainers while Dabur India, Patni Computer Systems and Bharat Electronics were conspicuous losers.

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