The Hindu Business Line : Markets ride bullish wave on back of strong earnings news

Trading highlights
Advance/decline ratio stands in favour of gainers at 2:1
IT and metal stocks led the rally on the Sensex
Cement stocks shine on the back of strong numbers by Gujarat Ambuja Cement

Buoyed by strong earnings announcements from frontline stocks, the markets were filled with positive sentiment on Monday.

The bullish undertone could be gauged from the advances-declines ratio at 2:1 in favour of the gainers; however, bears appeared to be active in the mid-cap and small-cap space. IT and metal stocks led the rally on the Sensex.

Sector watch

Intense buying activity could be gauged on frontline cement stocks such as ACC, Grasim and Madras Cements.

Buying activity appeared to have set in after Gujarat Ambuja reported 40 per cent rise in revenues and 110 per cent growth in earnings for the third quarter.

Supported by a sharp rise in volumes, the stock surged by eight per cent. The bullish sentiment also spread to lower-rung stocks such as Birla Corporation, Chettinad Cement, Dalmia Cement, Mangalam Cement, Mysore Cement, Prism Cement, and Ultratech recorded sharp gains.

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Buoyed by a sharp rise in global metal prices, bullish sentiment prevailed in the sector. Hindalco and National Aluminium closed with gains of more than four per cent after the two announced hike in aluminium prices for the second time in April.

Madras Aluminium and India Foils also joined the rally. Representing the gainers in the steel space were Essar Steel, Ispat Industries, JSW Steel, SAIL and Tata Steel. Sesa Goa also closed with three per cent gain. Hindustan Zinc and Hindustan Copper also registered sharp gains.

The market appeared to have been more than satisfied with performance and earnings guidance by Infosys.

Supported by buying activity, the stock surged seven per cent. Other frontline stocks also gained; notable gainers were Ramco Systems, NIIT, HCL Technologies, Allsec Technologies and Satyam Computers.

Event-specific Action

Announcements by Thermax failed to lift the spirits of the markets. Early in the day, the company announced that it had bagged an order worth Rs 360 crore for design, manufacture, supply, erection, and commissioning of auxiliary boilers and heat recovery steam generator.

Failing to sustain pace the stock dropped to Rs 374.50. The drop comes on the back of sharp gains recorded since the beginning of April.

The markets appeared to be enthused by UTI Bank's performance in the fourth quarter. The bank reported 40 per cent growth in earnings supported by a sharp rise in interest income. The scrip recorded five per cent gain. HDFC Bank, which also reported its performance for the fourth quarter, closed higher.

Accompanied by a 10-fold rise in volumes CMC surged by eight per cent. Earlier in the day, the company reported 20 per cent revenue growth for the fourth quarter.

Post-market announcements

TCS announced a 45-per cent rise in revenues and a 76-per cent growth in earnings for the fourth quarter. The stock was among the notable gainers in the IT space recording a 6-per cent gain.

Gujarat Fluorochemicals announced successful commissioning of its project for GHG emission reduction in accordance with the CDM norms. Accompanied by a sharp rise in volumes the stock surged ahead by about 14 per cent.