Monday, May 25, 2009

Sensex Today: Midcaps on Top, Ends in Green

Equity benchmarks ended a range-bound session flat on Monday, as investors made a beeline to mid- and small-cap shares for attractive deals. Realty, healthcare and FMCG were the star performers while IT ended flat-to-negative. Subdued global markets also kept foreign funds away from investing aggressively, said dealers.

Market tripped after a positive opening, tracking the weakness in other Asian markets. Every move by the indices to break free was met with selling. Index heavyweights like ONGC and Reliance Industries offset gains made by others like Ranbaxy Laboratories and Bharti Airtel.

Oil shares reacted to reports that the new UPA government planned to cap profits of crude producers such as ONGC, Oil India, Reliance Industries and Cairn India as part of a transparent and sustainable subsidy-sharing system for the sector.

The proposal to levy a special oil tax was part of the recommendations of the BK Chaturvedi Committee, appointed to look into oil pricing as a replacement for the current subsidy-sharing plan that has been criticised for its lack of transparency.

Bombay Stock Exchange’s Sensex ended at 13,913.22, up 26.07 points or 0.19 per cent. The index touched an intra-day low 13819.25 and high of 14028.06. National Stock Exchange’s Nifty closed at 4237.55, down 0.95 points or 0.02 per cent. The broader index touched a high of 4270.05 and low of 4205.10. Market breadth on BSE showed 2,470 advances against 316 declines.

“Institutional activity was average and some profit booking was seen though market undertone remains bullish. Traders were accumulating midcaps and smallcaps as valuations of frontline stocks are over-stretched. Most players are stuck and are trying to make most of the recent rally. Traders who were trapped at higher levels are trying to exit while those who were left-out during the rise are trying to buy small quantities,” said Bharat Shah, head institutional sales, Ventura Securities.

The BSE Midcap Index closed 2.83 per cent higher and BSE Smallcap Index gained 5.01 per cent. Shares of distilleries and breweries companies were in demand. Balaji Distilleries was up over 12 per cent, United Breweries was locked at 20 per cent circuit and United Spirits gained 8.14 per cent.

Action was also seen in gems and jewellery space. Gitanjali Gems surged 19 per cent, Rajesh Exports gained 10 per cent and Su-raj Diamonds advanced 14 per cent.

BSE Realty Index was up 4.25 per cent, BSE Healthcare Index gained 2.83 per cent and BSE FMCG Index moved up 2.73 per cent. The only sector that continued its losing streak was the technology pack with BSE IT Index down 0.89 per cent.

Bharti Airtel (-5.41%), NTPC (-1.66%), HDFC (-1.63%), Grasim Industries (-1.63%) and ACC (-1.06%) were amongst the Sensex losers. The biggest Sensex gainers were Ranbaxy Laboratories (20.73%), Jaiprakash Associates (7.16%), Sterlite Industries (5.94%), DLF (5.42%) and ITC (3.6%).

“There was no rationale for the (Ranbaxy) stock to surge with Malvinder’s exit. Certain FIIs must have bought some quantity on expectations of positive development ahead,” Ventura’s Shah said.

Malvinder Singh stepped down as chairman and CEO of Ranbaxy Laboratories on Sunday, ending his family’s 48-year-old association with the country’s largest drug maker and paving the way for Daiichi Sankyo to take complete control of the company it acquired last year. A senior Daiichi Sankyo executive, Tsutomu Une, was appointed chairman, and company’s COO Atul Sobti was named MD for a three-year term. In another crucial development, Mr Singh and his two other nominees, Religare CEO Sunil Godhwani and Balinder Singh Dhillon, also quit the board.

Bharti Airtel swung wildly in early trade after the company said it has resumed talks to acquire South African telecom giant MTN. The Indian telecom major is exploring a potential transaction whereby it would acquire 49 per cent in MTN, and in turn, MTN and its shareholders would acquire 36 per cent economic interest in Bharti, the company said in a notice to the stock exchanges. Bharti and MTN have agreed to discuss the potential transaction exclusively with each other by July 31. The stock got beaten down after analysts felt that the Bharti Airtel’s balance sheet may come under debt pressure in the short term.

Elsewhere, stocks in Europe were in the red but off lows while the UK markets are closed for a holiday. DAX was down 0.62 per cent and CAC 40 fell 0.24 per cent. The US markets are likely to open lower suggests stock futures. At 5 pm IST, Dow Jones futures was down 0.10 per cent, S&P 500 inched 0.03 per cent lower and Nasdaq 100 declined 0.31 per cent.