Financial Daily from THE HINDU group of publications
Friday, Mar 18, 2005
Markets - Commentary
Columns - Sensor
Higher crude prices, FII selling spur broad-based decline
IT was a day when gainers were sparse, especially among large-cap stocks, as there was a broad-based decline in equities. Fears of oil prices remaining at higher levels than what was expected as crude for April delivery moving to a record high weighed on stock prices. Indications that FIIs had turned sellers after several weeks of buoyant inflows also fuelled the weak sentiment. The BSE Sensex closed 77.36 points lower at 6669.52.
It was one of those rare days when the trend in mid-cap stocks (CNX 200) as well as the broad market (CNX 500) mirrored the Nifty and Sensex. Declining stocks outnumbered advancing stocks by a factor of 4. The only sector that ended with a marginal decline was information technology. Large-cap stocks bore the brunt of the selling as Bharti Tele-Ventures, Reliance Industries and SAIL led the decline. In the 30-stock Sensex, only two - ONGC and ICICI Bank - remained in positive territory. ONGC was marked higher as it would be a prime beneficiary if oil prices remain at higher levels.
The highlight of the day's trading was the listing of the stock of UTV Software, with 16 million shares getting traded on its debut. The stock opened at Rs 150 on the NSE, touched a high of Rs 175 and ended at Rs 168. The stock had been offered at Rs 130 in the initial public offering.
Concerns of rising crude prices affected sentiment in the stocks of oil-refining companies with HPCL, Indian Oil and BPCL shedding value. The only stock to escape the trend was Bongaigaon Refinery. Stocks of companies in the automobile and engineering sectors were also on a weak terrain.
A weak undertone was also evident in the banking sector stocks. Leading the declines was Punjab National Bank, which shed about 7 per cent. The stock had risen sharply in the homestretch to the equity offering, which closed last week. It appears to be unwinding most of the gains. Oriental Bank, Bank of Baroda and HDFC Bank were the other banking stocks that sported sizeable declines. State Bank of India posted a marginal decline while ICICI Bank was the only prominent bank in the large-cap category to end the day on a positive note. Andhra Bank was one of the stars of the day and closed with smart gains.
At the forefront of the decline were stocks from the steel sector. Even as SAIL and Tata Steel ended the day with modest declines, the likes of Ispat Industries, Essar Steel and Uttam Galva Steel suffered sharp losses. The last mentioned has topped the losers' charts on the NSE shedding about 10 per cent. Cement stocks, too, ruled weak.
In this backdrop, an interesting trend was the firm undertone in construction-related stocks. Gammon India, IVRCL Infrastructure, Nagarjuna Construction, Hindustan Construction, Ramco Industries and Skanska Cementation were prominent gainers. The stocks of the paints majors - Asian Paints and Goodlass Nerolac - too posted significant gains.
Fertiliser sector stocks managed to hold their ground bucking the broad market trends. The likes of Rashtriya Chemicals and Fertiliser, Nagarjuna Fertilisers and Chambal Fertilisers were marked up.
In price developments linked to company-specific actions:
* JMC Projects was traded at higher levels as it announced a rights offer at a price of Rs 45, which is about 50 per cent lower than the prevailing market price.
* KEC International notched gains on the back of an order from the Power Grid Corporation of India.
Momentum stocks that maintained their upward march were Astra Microwave, Max India, Godfrey Philips, LMW and Sundaram Clayton. The likes of Trent, Thermax, Praj Industries, Hinduja TMT, Asian Hotels and Dredging Corporation of India lost steam.
Other prominent gainers were NRC, TTK Prestige, Finolex Industries, Tele Data Informatics, Blue Dart, MICO, Tata Elxsi, Goetze, Satnam Overseas and Shanthi Gears. Notable losers were Reliance Capital, Usha Martin, Moser Baer, Aurobindo Pharma, HEG India, Kirloskar Ferrous, Electro Steel Castings, United Breweries, Hindustan Sanitaryware and Pritish Nandy Communications.
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