The Hindu Business Line : Capital goods, tech majors gain ground

Moderating oil prices and positive cues from the global markets helped the Indian indices stage a further recovery on Wednesday, though doubts remained on whether the series of interest rate hikes would warrant a downward revision in the country's GDP growth estimates.

The BSE Sensex closed the trading session with a 162-point gain and the Nifty with a 43-point gain. The rally was led mainly by selective buying interest in capital goods, healthcare and banking stocks, while automakers and cement trended lower. Mid-cap stocks trailed the bellwethers, with the BSE Midcap index registering a gain of 0.83 per cent, against 1.28 per cent on the BSE Sensex. Market breadth was positive, with advances outnumbering declining issues.

Index movers

Gains in the indices were driven mainly by stocks such as HDFC, Reliance Industries, ICICI Bank and Infosys. Cement stocks such as Grasim weighed on the indices. The government proposal to trim import duty on cement raised fresh doubts about the extent of pricing power that would be enjoyed by cement companies in the year ahead and triggered a fresh sell-off in cement stocks.

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Concerns about rising interest rates and its impact on growth, stoked by March sales numbers for some players, continued to drag down automobile stocks such as Maruti Udyog and Hero Honda. These were the key stocks in the index basket that declined during the session. Pharma stocks such as Dr Reddy's Labs, Cipla were on a strong footing making gains of 2-3 per cent.

Mid-cap movers

In the mid-cap space, key sector themes that attracted buying interest were metals and mining, power equipment and sugar. Realty stocks fell while cement stocks in the mid-cap space followed their large-cap peers to register declines for the day.

Mid-cap stocks that showed significant activity during the day were Praj Industries (up 10 per cent), Gujarat NRE Coke (up 9 per cent), Sterlite Industries (up 8 per cent), and Hindustan Zinc (8 per cent). Stocks of power equipment companies - Jyoti Structures and RPG Transmission attracted buying interest, while capital goods maker Crompton Greaves also registered strong gains.

The recovery in sugar stocks continued on news of ethanol contracts won by several companies, with second-rung sugar stocks such as Uttam Sugars, Upper Ganges Sugar and Dhampur Sugars registering strong gains for the day. Outside of these sectors, media majors - HT Media, NDTV, apart from Titan Industries were a few stocks which registered gains of over 5 per cent.

Stock-specific action

The BHEL stock built on the preceding day's gains, after the company announced its target of doubling revenues over the next 5 years. The Deccan Aviation stock gained ground on expectations of a possible turnaround in profitability. The Ashok Leyland stock weakened on high trading volumes on fears of a slowdown in sales due to rising financing costs. The company's March sales numbers showed a decline in truck sales vis-a-vis the same period last year.

Cues to next session

Aurobindo Pharma has received marketing authorisation in the Netherlands for certain dosages of Lisinopril- a generic drug used to treat hypertension.

Shopper's Stop announced, after close of market hours, that the company, partnered with the Swiss Nuance group has been awarded the contract to operate duty-free shops in Hyderabad International Airport.

Stocks which registered a significant increase in trading volumes against the previous average were Sundaram Finance, MICO, Atlanta, Revathi Equipment and GMDC.

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