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Wednesday, Aug 17, 2005

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Buying interest in small, mid-caps salvages market

Vidya Bala

THE markets ended on a flat note on Tuesday after range bound trading witnessed throughout the session. The Sensex closed at 7768.2 - up 0.8 points.

After a bout of profit-booking the markets managed to regain lost ground with an intra-day high of 7828. Alternate bouts of buying and selling among the index heavyweights resulted in a flat close.

The market breadth, however, remained positive with an advance decline ratio of 2.2:1. This can be attributed to the strong buying interest in mid-cap and small-cap stocks.

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The BSE Smallcap was up 2.18 per cent. The S&P CNX Nifty closed at 2369.8 - a gain of 8.3 points. The banking indices at the BSE and NSE were the worst hit with declines of about 1 per cent.

Near record levels of crude oil prices and slowing down of FII inflows may have added to the cautious mood witnessed in the markets.

Metal and capital goods segment witnessed some gains, while auto and IT stocks ruled weak. In the basket of BSE-30 (Sensex), BHEL led the pack of gainers, followed by Bharti Tele, Associated Cement Companies and Hindustan Lever. Grasim Industries, Satyam, Hero Honda and HDFC Bank were some of the heavyweight stocks that declined.

The small cap space saw active buying in the stocks of Sandesh, Morarjee Textiles and Welspun Syntex. All the three stocks rose by about 20 per cent.

BSE Metal Index was the biggest gainer and rose by 1.6 per cent. Backed by expectations of rise in steel prices, Tata Steel gained 1.6 per cent to close at Rs 409 while SAIL closed at Rs 65 - a gain of 3 per cent.

Essar Steel and Ispat Industries also made gains in the range of 5-6 per cent.

The oil and gas segment was a mixed bag. Among the mid cap stocks Gujarat Fluoro, BOC and Petronet LNG made smart gains while frontline stocks such as Reliance, Bharat Petroleum, GAIL and IBP lost ground and ended in the red.

After long periods of lack-lustre performance chemical stocks witnessed a bull run in the markets. Hindustan Organic Chemicals gained 30 per cent to close at Rs 55. GHCL and BASF also rose by about 9 per cent.

Buoyancy in the construction segment continued with fresh buying interest in many mid cap stocks. IVRCL Infrastructures rose by 7 per cent to close at Rs 754 while Era Constructions was up by 15 per cent and closed at Rs 128.

Normal monsoons drove the fertilizer stocks northwards. Zuari Agro led the journey with a gain of 13 per cent followed by Bindal Agro and Godavari Fertilizer.

In the pharma sector, Morepen Laboratories was conspicuous by its smart rally of 20 per cent. RPG Lifesciences and Shasun Chemicals also made significant gains while Dr Reddy's Lab and Aventis Pharma bowed to pressure from the bears.

Smart rally in the cement segment over the last few weeks continued on Tuesday, largely propelled by housing sector boom and near-full capacity of many cement companies. Mysore Cement surged by 5 per cent to Rs 26 followed by Prism Cement and Madras Cement with gains of 4 per cent each.

Bank stocks succumbed to extreme selling pressures. Union Bank of India, Bank of Baroda, ICICI Bank and Allahabad Bank ended in the negative territory. Indian Overseas Bank, Canara Bank and Kotak Mahindra Bank however managed to weather challenges from the bears and made marginal gains.

Stock specific action:

ONGC gained Rs 5.6 to Rs 956.5. The company along with the Mittal group has made a bid to acquire Kazakhstan's Petrokazakhstan Inc.

Supreme Industries surged by Rs 55 to close at Rs 330.5 after its fourth-quarter profits more than doubled. The company has declared a dividend of Rs 9 per share.

Significant gainers among the Nifty constituents include Sun Pharma, ABB and GE Shipping. Tata Power, Asian Paints, IDFC and Sirpur Paper Mills were prominent losers.

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