Suresh Krishnamurthy

THURSDAY turned out to a big day with major corporate developments swamping the market. There was a steady flow of news through out the day, much of which turned out to be positive.

Traders grappled with major developments in the form of the Supreme Court ruling in favour of cigarette companies and Holcim's proposal to acquire majority stake in ACC and Ambuja Cement Eastern.

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They also had to deal with the anticipated announcement of the swap ratio for IDBI's merger with IDBI Bank, buyback of shares by GlaxoSmithKline Consumer and Reliance Industries and the announcement of financial performance by major companies such as Gujarat Ambuja, Tata Steel, Satyam Computer and IPCL.

The flow of positive news, however, was not enough to completely counter the negative sentiment that engulfed the markets.

Even as Sensex bounced back from a level below 6,100 to end above 6,200 thanks mainly to the strong pullback by ITC, majority of the traded stocks recorded losses.

In A-group, 145 out of the total 205 stocks registered declines. Even in Sensex, 19 of the 30 stocks ended in negative territory.

Major losers among the A-group stocks include Maharashtra Seamless, Wockhardt, Indo Rama Synthetics and Bharti Televentures.

Amongst indices, Nifty Junior was the major loser. Stocks such as Wockhardt, Biocon, Patni Computer Systems and a host of banking sector stocks pulled down this index.

A number of small-cap stocks also logged large declines with a number of stocks that are part of S group at BSE losing 10 per cent of their value.

Prominent gainers include Avaya Global, ITC Hotel and Bajaj Hindustan. These stocks gained more than 10 per cent.

Cigarette stocks surge: The Apex court's ruling that states had no right to levy luxury taxes came as a shot in the arm for cigarette companies.

Stocks of ITC, VST Industries, Godfrey Phillips and GTC Industries shot up in value. ITC ended the day with a gain of nearly 11 per cent. The ruling is expected to help cigarette companies in pricing their products more effectively.

Cement stocks turn weak: Stocks affected by the takeover deal such as ACC, Ambuja Cement Eastern and Gujarat Ambuja understandably plummeted after the announcement of the arrangement between Gujarat Ambuja and Holcim.

This, however, pulled down a host of cement sector stocks such as India Cement, Prism Cements and Madras Cements. The stock of UltraTech Cement, however, bucked the trend to register strong gains.

Bank stocks slump: Prominent losers on Thursday included a number of stocks from the domain of banking. Stocks such as Andhra Bank, Allahabad Bank, Canara Bank and Syndicate Bank suffered losses. The stocks of IDBI Bank and IDBI, however, firmed up. The share swap ratio anticipated through the day was, however, announced only after trading hours.

News and stocks: The stock of Ruchi Soya surged ahead by 12 per cent.

Reports that the Bunge group may be interested in acquiring a stake may be behind the price spurt. The company has denied that it is in talks for selling a strategic stake.

The price of the stock of DPIL rose by 5 per cent in the wake of the company's announcement that it is considering a scheme of arrangement.

The stock of Diamond Cable flared up by 10 per cent in value. The company announced that it has bagged an order for Rs 31 crore from Gujarat Electricity Board.

The stock of Centurion Bank declined by 3.6 per cent. The company has proposed to raise resources to the tune of Rs 600 crore that may involve further expansion of its equity capital.

(This article was published in the Business Line print edition dated January 21, 2005)
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