The boom in India

Daily round up from Infoline

'Bulls party on the bourses

The market closed the new year on a strong note. The Sensex and Nifty ended above 5900 and 1900 mark respectively. There was smart rally in HLL, SBI, HPCL, ACC and MTNL, which lifted the Sensex by 77 points (1.3%) to close at 5915. The market was strong throughout the day and volumes were normal despite the start of the new year. FIIs and domestic funds continued to show heavy buying interest mainly in cement, telecom, FMCG, auto, steel, PSU banking and tech stocks. Shipping stocks were back in action after a lull on hopes of better earnings. SCI (7%), GE Shipping (up 8%) and Varun Shipping were in limelight today. Good monsoon and increase in GDP by 8.4% in the second quarter boosted FMCG stocks. HLL (up 4%), Colgate (up 5%) and Tata Tea witnessed smart rally.

Telecom stocks like VSNL (up 7%) and Bharti Tele (up 7%) saw major action. Hike in FDI limit and increase in mobile subscriber base boosted the sentiment. Banking stocks recorded smart gains. SBI spurted by 4% to close at Rs566. There are rumors that some domestic funds have been aggressive buyers on the counter. Cement stocks like ACC(up 6%) and Gujarat Ambuja exhibited smart gains on rumors of increase in cement price. Auto stocks especially two wheeler stocks witnessed fresh buying.TVS Motors surged by 11% from the intra-day low of Rs99 after the company reported 12% drop in December bike sales and 53% jump in scooter sales. The market by and large expected the fall in bike sales. Heavy weights like Reliance saw some profit booking after a rally in the last few sessions.

Shipping stocks were back in action today on hopes of better earnings from Shipping companies. Increase in freight charges boosted shipping stocks. As a result SCI jumped by 7% to close at Rs193. GE Shipping and Varun Shipping spurted by 9% and 7% respectively.

Telecom stocks especially mobile services firm recorded smart gains due to strong increase in mobile subscription. Moreover government's decision to hike FDI limit to 74% from existing 49% also had a positive impact. VSNL shot up by 7% to close at Rs157 and Bharti gained 6% to close at Rs111. MTNL too posted handsome gains.

Among the Sensex stocks - Cement stocks witnessed smart rally on rumors of hike in cement price. Cement major -ACC climbed up by Rs14(6%) to close at Rs260. Moreover Gujarat Ambuja gained Rs8 to close at Rs311. SBI was the major gainer among banking stocks on rumors of local funds buying into the counter. SBI surged by Rs28(6%) to close at an all time high of Rs567 on hefty volumes of 9mn shares traded on both the exchanges. FMCG stocks witnessed smart rally on account of good monsoon and impressive growth in GDP numbers for the second quarter. HLL surged by Rs9 to close at Rs213. Reliance witnessed profit booking after a rally in the last few sessions. The scrip slipped by Rs3 to close at Rs569. Tisco and Telco counters had a dull day with not much intra-day movement. HPCL exhibited smart rally. The scrip advanced by Rs13 to close at Rs430. Tech stocks like Infosys, Satyam(up 2%) and HCL Tech witnessed fresh buying. Others like ITC, L&T, ICICI Bank and Ranbaxy gained marginally.

Among the sectors, Auto stocks saw buying interest with TVS Motors ending the day with a gain of 5.35% at Rs112.20, Hero Honda gained 2.25% to close at Rs458 while Bajaj Auto ended the day with a modest gain of Rs15 at Rs1136. Among the four wheeler stocks Ashok Leyland witnessed profit booking at higher levels to close the day at Rs293.50, Escorts spurted by almost 5% at Rs90 while Tata Motors ended the day with a modest gain of 0.34% at Rs453.

The major gainers among the tech stocks were Infosys which ended the day with a gain of 1.11% at Rs5628, Satyam jumped 2.29% at Rs375 while Wipro ended the day with a gain of 1.38% at Rs1758. Polaris(up 3.18%), Rolta(up 2.66%) and I-Flex(up1.95%) were among the other prominent gainers of the day. Hexaware(down0.75%) and HTMT(down0.42%) were among the losers of the day.

Steel stocks continued to attract buying today. Among the major gainers were Jindal Iron(up2.90%) at Rs296, Jindal Steel(up 3.96%) at Rs643 and SAIL(up 2.74%) at Rs52.50. SAW Pipes ended the day with a modest gain of 0.26% at Rs291.

Among the banking stocks SBI lead today's rally with a gain of 5.26% at Rs566, Vijaya Bank spurted by 11.60% at Rs46.70 while Syndicate Bank jumped by 6% to Rs40.50. ICICI Bank ended the day with a gain of 2.15% at Rs302 while HDFC bank ended with a modest gain of 0.67% at Rs367.50.

The bull market is expected to continue on back of huge buying interest by both domestic and foreign institutional investors. However profit booking is expected at higher levels as the current rally has run too far for investor's comfort. The Sensex has gained 351 points in the last six trading sessions. Most brokerage houses are now revising their forecast for the current year 2004. Some see the Sensex touching as high as 8000 by the end of Dec 04. Tech stocks like Infosys, Hughes Software, Satyam, Wipro may rally further in tomorrow's trade while the US markets are closed today. Hughes Software will announce Q3 results on January 3. Cement and auto stocks may see major action. December cement shipments and vehicle sales figures will be announced very shortly. FMCG stocks may rally on hopes of good earnings going forward. Banking stocks may see further action. SBI, Canara Bank, PNB may attract buying as the valuation still seems to be reasonable. K Sera Sera may rally on back of board of the company considering Preferential Allotment of shares to institutional investors.'