The Hindu Business Line : Markets take a breather after strong rally

Markets paused for breath on Tuesday. This is on expected lines as the Sensex had recorded strong gains, in excess of 500 points, in the previous two sessions. Similar trend was observed in the other Asian markets too despite continued buoyancy in the US markets and the Dow Jones Industrial Average notching triple digit gain on Monday. European shares came under pressure on Tuesday when inflation in the United Kingdom accelerated to 3.1 per cent, the fastest pace recorded in a decade.

The market breadth was weak with 1,085 advances and 1,463 declining issues on the BSE. The BSE Small-cap Index, however, managed to withstand the slide better than its large-cap and mid-cap counterparts, losing only a third of a per cent. Indian rupee eased off slightly on speculation that importers sold the currency and bought US dollar. It lost 0.1 per cent on Tuesday.

However, the markets continued to worry about the impact of the rupee on the profitability of IT companies. The Information technology stocks were instrumental in leading the Sensex lower on Tuesday. Satyam Computer was the hardest hit, with a five per cent loss. Infosys Technologies, TCS and Wipro Technologies lost two per cent.

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Bargain hunting was witnessed in some of the front-line cement stocks that had been severely punished by the markets due the Government's move to control the prices. ACC registered a gain of two per cent while Gujarat Ambuja Cement gained a per cent.

Alfa Laval moved up nine per cent to close at Rs 981. The move seems to be influenced by the fact that the open offer to the shareholders for acquiring their shares at Rs 875 per share is opening on April 19.

The 36 per cent increase in the net profits for the year 2006-07 did not help the stock price of UTI Bank. It closed flat with a loss of 0.75 per cent. However, other second-rung bank stocks recorded sharp gains in Tuesday's session. Syndicate Bank and Indian Overseas Bank gained five per cent and Corporation Bank gained four per cent.

Bharat Electronics (BEL) announced a 22 per cent increase in the net profit for 2006-07 brought about by winning additional contracts for radars, navigation systems and communication equipment from the Indian defence sector. The stock price, however, closed five per cent lower as the stock had increased 23 per cent in the nine sessions preceding the earnings announcement.

After the close of the trading session on Tuesday, HCL Technologies declared the unaudited results for the quarter ended March 31, 2007. The company has recorded a net profit of Rs 238.59 crore for the period, an increase of 77 per cent over the same period in the previous year. The market would be reacting to these numbers on Wednesday.

India's two biggest telecom providers, Bharti Airtel and Reliance Communications recorded a 6.2 per cent drop in their monthly average revenue per user after they cut the call rates in a bid to increase market share. This has resulted in these two companies providing the world's lowest call rates. Both the stocks closed with marginal losses for the day.