Financial Daily from THE HINDU group of publications
Saturday, Sep 04, 2004
Markets - Commentary
Columns - Sensor
Late-hour buying props up Sensex
A POSITIVE sentiment appears to have swept over the markets this week with the narrow indices ending in the positive territory for the fourth time in five trading sessions.
Notwithstanding the fact that inflation has shot up to a four-year high at 8.17 per cent, the markets managed to remain optimistic. The end of the truckers strike appears to have brought some relief to the markets.
Banking stocks led the rally on Friday, while there was buying in select stocks of the textile, power and capital goods and profit booking in auto and cement sectors.
The BSE Sensex ended the trading session at 5218.46 points, 20 points or 0.38 per cent higher than its previous close. The Sensex traded weakly for most of the trading session. But strong buying interest in the last two hours of trading propped the index up into the positive territory.
The benchmark index has gained nearly two per cent over the previous week. Three out of every five stocks constituting the Sensex advanced, reflective of the bullish sentiment. The Nifty gained nearly five points to close at 1634.10 points.
Among the sector indices, the BSE Bankex and the BSE Capital Goods Sector registered robust gains; both of them gained more than one per cent.
The index stocks that gained strongly include BHEL, SBI, Tata Power and Zee Telefilms. Stocks that suffered losses include Bharti Tele-Ventures and HLL.
The stock of Bharti took a blow as Reliance Infocomm and Hutch announced further cuts in tariffs for post-paid customers; the stock declined by 1.54 per cent to close at Rs 134.50.
Banking stocks were in favour after a long time on Friday. The stocks had taken a beating on fears that rising interest rates would have an adverse impact on the treasury income of banks. With the RBI permitting banks to transfer securities in excess of 25 per cent to the "Held to maturity" category, banks would be able to protect their profits from hardening yields.
Stocks that gained include SBI, ICICI Bank, Bank of Baroda, Vijaya Bank, Canara Bank and Federal Bank. The stock of Punjab National Bank gained Rs 7.4 to close at Rs 277.05. The stock has been gaining steadily in the past two weeks, even as it contemplates a second equity issue.
Select textile stocks also saw a spurt in values. Prominent gainers were Vardhman Spinning and Mahavir Spinning. The stocks have gained 10 per cent and 7 per cent respectively. Both companies are strong players in the yarn segment and are in the process of restructuring their companies.
Other stocks that gained include Abhishek Industries, Nahar Spinning, Zodiac Clothing, Super Spinning, Bombay Dyeing and Welspun India.
The stocks of Reliance Energy, Tata Power and Power Trading Corporation saw smart gains. Singapore Government-owned Temasek and Reliance Energy are to contribute to a fund that would invest about $200 million in various power projects across the country.
Profit booking was witnessed in the stocks belonging to the auto and cement sectors. The stock of TVS Motor, which reported a fall in offtake owing to the truckers strike, fell marginally. The stock of Eicher Motors declined by Rs 5.45 to close at Rs 192.4, even as the company reported an 88-per cent surge in commercial vehicle sales in August.
The stock of Forbes Gokak gained Rs 13 to close at Rs 164.50. The company plans to buy out Electrolux' 40 per cent stake in Eureka Forbes, the joint venture between the two companies.
The stock of Berger Paints fell by Rs 1.8 to close at Rs 34.5. The investors appear to have received the company's proposal to merge its subsidiary, Berger Auto & Industrial Coatings, with itself.
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