The Hindu Business Line : RBI move on inflation, Corus deal drag markets

Weakness plagued the bourses on Wednesday as the markets struggled to handle two major events - Tata clinching the Corus deal and RBI's move to curb inflationary pressures. The bears dominated the day although markets managed to pare some losses towards final hour of trade. The southward journey was clearly reflected in the declining stocks outnumbering the advances by a ratio of 2:1.

In what was seen as the biggest decline for Tata Steel in eight months, the stock was the biggest loser among the Sensex stocks after it raised its offer price by about one-third in the Corus bid, beating CSN to win the deal. The markets appeared to have perceived the deal as an expensive one and pulled the stock down by 11 per cent to Rs 464. Over one crore shares of the company were traded at the NSE.

In its monetary policy review on Wednesday, the RBI increased the repo rate by another 25 basis points to 7.5 per cent. This comes on the back of a similar hike a couple of months ago. Seen as a move to curb credit growth and inflationary pressure, the event saw industry majors such as ICICI Bank and State Bank of India shedding value to close in the red. The central bank also requires lenders to increase provisions for exposure in real estate sector, credit cards and loan against shares to 2 per cent.

Buzzing stocks

Select stocks in the mid- and small-cap space were conspicuous by their gains on a day that was otherwise dominated by the bears. Educomp Solutions hit its upper circuit filter before settling with a gain of 4.3 per cent to Rs 994. The company's third quarter profits had more than doubled. Ganesh Housing Corporation, Century Ply Boards, GVK Power & Infrastructure and Best & Crompton were other stocks that touched their upper end of the circuit.

Sector focus

The BSE Metal Index donned a pessimistic picture with the index losing 4.9 per cent on Wednesday. Following the

footsteps of Tata Steel, Hindustan Zinc also lost 7 per cent to Rs 707. Steel Authority of India, JSW Steel and Hindalco all declined in the range of 2-4 per cent.

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The central's bank's stand in the credit policy saw a number of banking stocks such as Centurion Bank of Punjab, Bank of India, Vijaya Bank and Karnataka Bank close with declines.

Muted results by sugar companies saw a number of them witnessing selling pressure. Shree Renuka Sugars, Bajaj Hindusthan, Sakthi Sugars, Mawana Sugars and Balarampur Chini Mills ended lower.

Stocks driven by results

Reliance Communications added 1.2 per cent to Rs 461. The telecom operator's third-quarter profits almost tripled.

The market responded with partial optimism to the spectacular results of Unitech. The stock rose 2.1 per cent to Rs 464.7 after the company announced a 33-fold jump in third quarter profits.

Shree Ashtavinayak Cine Vision, Autoline Industries, Aptech, Zicom Electronic Security Systems and Pyramid Saimira Theatre were key gainers among the NSE stocks. Thirumalai Chemicals, Hindustan Oil Exploration, Taj GVK Hotels and Ruchira Papers were significant losers.