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Tuesday, Jul 13, 2004

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Heavyweights turn weak on directionless day

Shanthi Venkataraman

A SORT of lull appeared to have settled over the markets on Monday. The Sensex, which gained more than 100 points on Friday, ended the trading session on a flat note. It closed at 4944.54 marginally lower than the previous close. The S&P CNX Nifty managed to muster a gain of about 4 points, to close at 1556.95 points. The markets appeared to be lacking in direction. Even the fact that industrial production in May rose 6.2 per cent over the previous year, failed to trigger the market.

Stocks belonging to the steel and textiles sector did manage to attract some buying interest during the trading session. However, the overall trading volumes were very low. Only about 8.35 crore shares were traded on the BSE. The low trading volumes could be attributed to continuing protests from traders on the transaction tax proposed in the recently announced Budget.

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The BSE Sensex opened the day on a mildly positive note at 4949.42 points, just 4 points higher than the previous close. It traded in a narrow range throughout the day, swinging between the positive and negative territories. The benchmark index ended the day just 0.02 per cent lower. Twelve out of the 30 stocks constituting the Sensex advanced.

Index heavyweights traded weak, with the exception of the stock of ONGC. The stock, which has a weightage of 5.22 per cent in the index, rose by 1.39 per cent, with most of the gains being witnessed in the later part of the trading session. The major gainers among the index constituents include the stocks of Satyam, Tata Steel, Cipla, ONGC and Tata Motors. Stocks that tanked were Hero Honda, Bharti Tele-Ventures, Grasim, HDFC and ICICI Bank. The stock of Bharti Tele had gained earlier, following the proposal to hike FDI in telecom.

The broader indices of the BSE did not do much better than the Sensex, with all of them posting only marginal gains. However, the CNX Nifty Junior and the CNX Midcap 200 put on a better show than the Nifty, gaining 1.53 per cent and 1.41 per cent, respectively.

A number of mid-cap banking stocks gained. Notable gainers include Oriental Bank, Union Bank, Kotak Bank and Bank of India. Other mid-caps that gained include the stocks of IDBI, Siemens, Dabur India, TVS Motors and Arvind Mills. The stock of IDBI, which gained 10 per cent on Friday, gained a whopping 19 per cent on Monday. The Government plans to issue Rs 900 crore worth of bonds to an asset management trust that would takeover the bad debts of IDBI.

Buying interest was seen in those stocks that are expected to gain from the Budget proposals. A sector that has received considerable attention in the last two trading session is the textile sector. A number of stocks have witnessed heavy activity. Vardhman Spinning, Mahavir Spinning, Raymond, Arvind Mills, Nahar Spinning were some of the stocks which figured in the gainers list. The stock of Alok Industries and Arvind Mills were the most prominent gainers of the day, gaining 10 per cent and 3.3 per cent, respectively. The stock of Indian Rayon, which ran up considerably on Friday and Monday, fell by Rs 7.9 to close at Rs 241. The gains that had been witnessed earlier may have also been attributed to the hike in the ceiling of FDI in insurance, which would have had a positive impact on Indian Rayon's insurance business.

Stocks of the steel sector saw select buying activity. Stocks of Tata Steel, Sesa Goa and Jindal Vijayanagar were the major gainers. The stocks could have perhaps appreciated on anticipation of a hike in steel prices following the increase in excise duty rates.

Cement and construction stocks traded weak. The stocks of Shree Cements, Valecha Engineering, Gammon India, Dalmia Cements saw a decline in prices.

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