Business Daily from THE HINDU group of publications
Wednesday, Jul 19, 2006
Columns - Sensor
Bearish sentiment continues with markets declining for the fourth straight day. Leading fall were the stocks of Reliance, TCS and BHEL. The day was marked with volatility, with the Sensex advancing to a high of 10,400 in the early hour of the trading session, only to plunge subsequently to a low of 10,149- an intra-day swing of 250 points. Buying in the stocks of ONGC and Infosys helped contain losses.
FIIS have been heavy sellers as rising crude prices are expected to make a dent on corporate performances. In just the first two days of the week, FIIs have sold more than Rs 1,000 crore on a net basis, according to provisional estimates available on the BSE.
Companies that announced their results on Tuesday received a mixed response from the investor community. Capital goods and metal stocks bore the brunt of the selling pressure. A depreciating rupee spurred buying in technology stocks, as it tends to have a positive impact on earnings.
Mid-caps and small-cap stocks continued to be on the receiving end. Only 25 per cent of the stocks traded on the BSE advanced, an indication of the extent of bearishness.
While the mid-cap and small-cap indices ended deep in the red, several mid-cap and small-cap stocks were prominent gainers. Godawari Power and Ispat, Seshasayee Paper, United Western Bank, Cholamandalam DBS and Sundram Fasteners were some of the offbeat stocks that were abuzz with activity on Tuesday.
The stocks of Deccan Chronicle, Finolex Cables, Marico, Shoppers' Stop and Hotel Leelaventures were among the prominent stocks in the gainers list.
Tech stocks stole the limelight. Spectacular results from Infosys have buoyed expectations. The depreciating rupee is also expected to favour tech companies, as they are export-driven. The stocks of Satyam and Wipro were among the gainers. The stock of TCS, however, took a beating on expectations that its performance would lag that of Infosys. The company announced its results after market hours.
Metal stocks plunged. Sterlite, Hindalco and Hindustan Zinc were heavy losers. Hindustan Zinc dropped 2.1 per cent, even as it declared a six-fold rise in profits. The stocks of Jindal Steel, JSW Steel and Tata Steel declined about 3 per cent each. The stock of Sesa Goa was down 3.5 per cent.
Capital goods stocks were also punished. Old favourites such as Bharat Electronics and Praj were major losers, as also Esab India, Ingersoll Rand and Carborundum Universal. Alfa Laval, Alstom Projects and BHEL also declined.
Investors appear to be keeping a close eye on corporate results, rewarding those whose performance exceeds expectations and punishing those who failed to measure up.
Titan declared its results after market hours on Monday. Profits declined on the back of lower margins in its jewelry business, its fastest growing division. The stock declined 3.6 per cent. Stocks of peers such as Rajesh Exports and Gitanjali Gems also witnessed a similar trend.
The stock of Hexaware appreciated 2.30 per cent, after it announced strong results. Geometric Software, on the other hand, got clobbered on the back of a disappointing quarterly performance. The stock tanked 6.8 per cent.
The stock of HDFC declined 1.6 per cent even as it announced a 20 per cent rise in profit. Fears of interest rate hikes and the resultant impact on housing demand is likely to have tempered sentiment.
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