The Hindu Business Line : Frontline infotech stocks crumble

SPIKES in oil prices, steel prices, and even the interest rate on fixed rate loans by HDFC, appear to have been the major drivers of activity in the markets on Wednesday.

The BSE Sensex declined for the second consecutive trading day this week, dragged down by decline in the prices of index heavyweights, particularly those of frontline tech stocks. The benchmark index declined by about 25 points to close at 5,169 points, down from the previous close of 5194.63. The S&P CNX Nifty, declined by four points to close at 1,626 points.

The Sensex opened on a weak note at 5,189 points and managed to advance to touch a high of 5,201. Thereafter, it declined on selling pressure to touch a low of 5,145 points. It remained in the negative territory for the rest of the trading session, although it managed to recoup some of its losses to close at 5,169 points.

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Among the 30 index constituents, only seven advanced, reflecting the bearish sentiment. The stocks of ITC and ONGC were the prominent gainers on Wednesday.

Among the sectoral indices, the BSE-IT index witnessed the most declines, shedding more than one per cent. The stocks of Infosys, Satyam, Wipro, Polaris and Mastek were among the IT stocks that lost more than one per cent in value.

The BSE-PSU Index, on the other hand, was the sole gainer among the key indices on the BSE. The oil stocks — ONGC, IOC and Chennai Petroleum — led the gains. The stock of Chennai Petroleum rose by Rs 5 to close at Rs 145. The company's hydrocracker unit, part of its 3 million per annum (mmtpa) expansion cum modernisation project, was commissioned on Wednesday.

Steel stocks ended higher for the second day in a row. This comes on the back of a hike in steel prices by steel majors. Tata Steel is said to have hiked the prices by Rs 500 per tonne to Rs 1,000 per tonne. The stocks of Tata Steel, SAIL, Jindal Steel and Ispat Industries were among those that were actively traded.

Banking stocks were out of favour on Wednesday. The stocks have been very volatile, with two mergers taking place within the span of a week. The stocks of Bank of Baroda, Punjab National Bank and Andhra Bank were among the major losers.

The hike in interest rates on loans appears to be a distinct possibility, with HDFC announcing a 25-basis point hike in the rates of its fixed -interest rate home loans. The stock of HDFC fell marginally to close at Rs 571.

Sugar stocks saw a spurt in prices and volumes. A package for the sugar industry is to be announced by the Prime Minister on August 15. The package includes rescheduling of loans outstanding to sugar mills as on March 31, 2004, as well as loans granted by State governments at a concessional interest rate of 2 per cent, to enable players to clear the statutory minimum price. The stocks of Bannari Amman, Rajshree Sugar, Sakthi Sugar and Dhampur Sugar figured in the gainers list.

A good number of textile stocks witnessed a decline in prices on Wednesday, possibly due to profit booking. Textile stocks have run up sharply following the announcement of a favourable package for the textile sector in the recent budget. Prominent losers were Malwa Cotton, Lakshmi Mills, Bombay Dyeing, Arvind Mills and Zodiac Clothing.

Other prominent gainers include the stocks of Asahi India Glass, Cummins India, Kirloskar Brothers, I-Flex Solutions and Glenmark Pharma. The stock of Asahi India closed at Rs 112.40 up from Rs 102. This comes on the back of news reports regarding the company's expansion plans. The stock of Glenmark Pharma ended higher at Rs 164 up from Rs 159. The company has received US FDA approval for its bulk drug facility in Gujarat.

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