The Hindu Business Line : IT stocks lead decline; Bajaj Auto up on spin-off talks

Pointers
Higher crude price, rising inflation and rupee appreciation weigh heavily on the markets
Market breadth continues to remain weak; small-cap and mid-cap stocks pare gains.
Interest rate worries hit banks

Weak US markets, rising oil prices and higher inflation weighed on the markets, with the Sensex and Nifty shedding close to 113 points and 36 points respectively. Though the markets opened firm, selling in IT companies on the back of rupee appreciation led to a weakening of sentiments, mirrored by the negative closing of all BSE sectoral indices. Mid-cap and small-cap stocks, however, suffered the maximum.

The impression was reinforced by advance-decline statistics. The market breadth remained skewed in the favour of the bears, with about three stocks declining for every advancing one. In the Sensex pack also, the sentiments were bearish, with all but seven stocks closing in the red.

New listing

Pochiraju Industries, notwithstanding the weak market conditions, managed a 50 per cent listing gain. The stock got listed at Rs 45 as against its issue price of Rs 30.

Buzzing stocks

Bajaj Auto surged on reports that the company is planning to spin-off cash and investment assets on fast track and may consider merging these assets, which include its insurance business, with Bajaj Auto Finance. Bajaj Auto, after gaining close to 5 per cent during the day closed with a 1.3 per cent gain. Bajaj Auto Finance, on the other hand, closed with a 17 per cent gain.

Zee Entertainment appreciated about 5 per cent. The spurt in the stock can be attributed to buying by investors seeking to invest in the direct-to-home business of the company, before the scheme of arrangement takes place.

Sector focus

Oil marketing companies lost as crude prices brushed past $60 a barrel. Bharat Petroleum and Indian Oil shed about 1.5 per cent each; HPCL lost close to 2 per cent during the day.

Index heavyweight, ONGC also lost a little over a per cent during the day. The company was recently awarded 25 oil and gas exploration blocks by the Government. Some of the other stocks that registered losses were RNRL, Essar Oil and Petronet LNG.

Concerns of a reduced export earnings on the back of a strong rupee appreciation led selling in the IT stocks. Software majors such as Satyam Computer, i-flex , TCS and Infosys closed in the red. Bucking the trend, Wipro closed with a gain of 1.2 per cent.

Click here for table

MphasiS BFL lost about 6 per cent. The conditional offer from EDS to acquire substantial stake in the firm could be attributed to the fall in price.

Weakness in the broader indices triggered selling across the mid-cap and small-cap stocks. Some of the stocks that lost significantly in this space were IndusInd Bank, Everest Kanto Cylinders, Kalyani Steel, Info Edge, Blue Bird and Shringar Cinema.

Interest rate worries hit banks on the back of a surge in inflation to over a two-year high. Federal Bank, Kotak Mahindra Bank, Bank of India and Canara Bank were among the major losers. ICICI Bank and State Bank of India, however, ended with measly losses.

Stock-specific action

Tata Motors, witnessed renewed buying interest on reports that the company has launched the diesel versions of the Indigo Sedan and Indigo Marina Estate. The stock closed with about a per cent gain.

KEC Infra registered intra-day gains of about 5 per cent on reports that it has sold land in Mumbai suburb Kurla for Rs 91.22 crore to Neptune Realtors.