The Hindu Business Line : Mid-cap stocks perform better on a weak day

The markets displayed further weakness on the day before the Budget, with the Sensex declining 1.25 per cent to close at 13478. The Nifty lost 49 points to close at 3893.9 points. The bellwether indices have shed a little more than 5 per cent over the past five trading session in the run up to the budget suggesting that investors expectations on the proposal front are low.

However, Tuesday's fall could be in part attributed to the rout in the Chinese market. China's main indices saw a free fall of 9 per cent, their biggest decline in a decade after its highest ruling authority, The State Council, decided to set up a separate task force to clamp down on illegal public offerings and other speculative activity. Almost all Asian markets ended in the negative. Foreign institutional investors made net sales to the tune of Rs 500 crore.

This could explain the huge sell-off in large-cap stocks. Only seven of the Sensex stocks advanced. Prominent gainers among the Sensex stocks were ACC, HDFC Bank and Maruti Udyog. The markets were volatile during the trading session, with the Sensex registering an intra-day swing of about 295 points. All sectoral indices ended in the negative.

However, mid-cap and small-cap stocks performed relatively better with the indices recording marginal gains. About 51 per cent of the stocks traded on the BSE advanced. It was a volatile trading day with the Sensex registering an intra-day swing of 295 points before settling at 13478.

Buzzing stocks

Recently listed stocks have been off colour lately. The likes of Pyramid Saimira, Atlanta, Shree Ashtavinayak Cinemas, Autoline Industries and Transwarranty Finance took a beating on Tuesday.

Capital goods stocks AIA Engineering and Bharat Electronics were in the limelight on expectations of positive developments in the sector.

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Construction stocks rose with the expectation of thrust on infrastructure. C&C Construction closed 17 per cent below offer price after its debut on Monday. It, however, made a smart recovery on Tuesday, gaining about 8 per cent. Nagarjuna Construction was another prominent gainer in this space. Real estate companies Mahindra Gesco, Ansal Properties and Prajay Engineers also gained.

Sector themes

While the decline appears to have affected all sectors, the hardest hit was the BSE FMCG index, which declined close to 2 per cent. This was largely due to weakness in ITC, which fell 3 per cent on expectations of a further increase in excise duty and the possible implementation of VAT. Colgate Palmolive, GlaxoSmithKline Consumer and Marico, however, ended the day on a strong note. Marico touched its 52-week high at Rs 61.4 (adjusted for split) on Tuesday.

The software index also ended weak. Mid-cap software stocks, however, appeared to evince interest. Prominent among the gainers were Cambridge Technologies, Redington, NIIT and RS Software.

Stock-specific action

Thomas Cook rose 10 per cent on its proposal to split its stock into 10 shares of face value of Rs 1.

Alfa Laval rose by a smart 6 per cent after its parent company announced that it plans to raise its stake in Alfa Laval India to 90 per cent from the current 64 per cent by offering to buy 4.7 million shares at Rs 875 each by way of an open offer.

HOV Services surged by 5 per cent. The company is to acquire the US-based Lason Inc for $148 million.