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Thursday, Dec 01, 2005


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Weakness envelopes large-cap stocks

S. Vaidya Nathan

IT was yet another day that held the promise of a 9K-plus close for the Sensex. For the second time in three days, the Sensex flirted with the 9,000 mark.

Unlike Monday when it twice kissed the level but slipped swiftly, the dalliance lasted for close to two hours on Wednesday, as equities welcomed the opening bell with a firm undertone.

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An impressive GDP growth number in excess of eight per cent for the July-September quarter appeared to provide the perfect setting for a record close.

The trends in the early hours of trade did, however, prove a red herring for the pounding that to follow, as large-cap stocks shed about three per cent from the highs of the day.

Wipro, Infosys and TCS paced the decline in equities on a day when the only large-cap play to sizzle was Nestle. Siemens, which had held the markets in thrall with a rise of about 35 per cent in six trading days flat, took a well- deserved breather, as the re-rating process appeared to be complete for now. Sree Renuka Sugars and PBA Infrastructure continued their relentless upward march that has followed lacklustre listing earlier in the month. Suzlon - a highly fancied and deep-in-the-money new listing - took a break after posting impressive gains over the past week. Momentum stocks that chugged along nicely were Financial Technologies, Unitech, Suprajit Engineering, Bannari Amman Sugars and Aventis Pharma.

Profit-booking by traders appeared to be the driving force behind the downward trend; this was evident from the focused selling in large-cap stocks. On such a day, stocks in the mid-cap space held their ground and escaped with minor bruises. In percentage terms, mid-caps shed just a quarter of the value that was lost by counterparts in the large-cap space. Small-cap stocks, too, suffered to a lesser degree.

The Nifty, Sensex, CNX 500 and BSE 500 shed more than a percentage point, mid-caps lost just a quarter of what their large-cap counterparts lost. This was reflected in the advance-decline numbers, too. In the Nifty and Sensex baskets, declining stocks outnumbered advancing stocks by a factor of four; for the broad market, this number was substantially less than two. In event-specific price action:

  • NALCO notched the biggest gains in the Nifty, aided by an aluminium price hike, and was preferred ahead of the diversified Hindalco, which was flat.

  • BCPL, HPCL, Kochi Refineries and Bongaigaon Refinery were marked up on dividend expectations, as the government had directed profit making and cash surplus PSUs to pay a dividend of at least 30 per cent; IBP was, however, not fancied, as swap ratio concerns appeared to be in play.

  • An impressive earnings card propelled Centurion Bank of Punjab and JK Industries, which were among the big gainers of the day.

  • A Rs 1,000-crore order from ONGC could not counter the selling pressure in the large-cap space and save Larsen & Toubro from shedding value; news flow could, however, aid an early bounce back in this stock.

  • A hike in cable television rates evoked a lukewarm response in the Zee Telefilms stock, which has the highest priced bouquets in its distribution business. Television Eighteen was the only media play to display a firm undertone.

  • The announcement of a two-for-one stock split brought no cheer for the Nirma stock.

    It was a fine outing for mid-cap engineering sector stocks on a day when BHEL bucked the corrective phase in Siemens and ABB in the large-cap category. Tobacco stocks such as VST Industries and Godfrey Phillips edged higher though ITC was sucked in by the pressure in large-cap stocks.

    Private sector banks were in the limelight on a day when their PSU peers did not appear prominently on the buying radar of investors.

    UTI Bank, Kotak Mahindra Bank, HDFC Bank and ICICI Bank were in positive territory. IDFC, too, was marked higher buttressed by massive volumes.

    Lyka Labs (the biggest gainer for the day with a 20-per cent rise), Sah Petroleum, IVP, Nihar Info Global, Trent, Tata Tea, MICO and Maestro Mediline were notable on the gainers' list. Losers included Ashok Leyland, TVS Motor, Spanco Telesystems, TTK Prestige, Advanced Micronic Devices and Subash Projects.

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