Monday, August 29, 2005

Sensex ends lower; recovers close to 75 points from day's low

The BSE Sensex ended the session at 7,634.43 points, down 45.79 points from
its previous close. NSE Nifty closed at 2,337.65 points, with a loss of
19.40 points. The Sensex had opened 13 points higher than its previous close
of 7693 and hit a high of 7700 points. Then, immediately, the Sensex tumbled
to a low of 7566. The Sensex started on a recovery from this level. It
recovered close to 75 points from the low of the day. Total turnover
amounted to Rs 2,779 crore today. The advance-decline ratio ended strong,
with 1657 shares moving up and 962 shares declining. About 34 shares
remained unchanged.

Among Sensex stocks, 20 ended lower while 10 moved higher. Hindalco was the
top gainer in the Sensex, up 1.97% to Rs 1,390. Bharti Tele (up 1.77% to Rs
316) and HDFC Bank (up 1.13% to Rs 643) also made decent gains. Cipla (down
3.5% to Rs 341), Dr Reddys (down 2.85% to Rs 774) and Bhel (down 2.78% to Rs
1,056) edged lower. Side counters GMR Industries, Himatsingka Seide, Jain
Studios, Mangalam Timber, OTCO International, Sujana Metals, Bhagwati Gas,
ABM Knowledge, Hitachi Home Appliances and Facor Alloys all surged 20% each.
Inani Securities, AK Capital, VCCL, Ferro Alloys, and Rathi Udyog, all shed
close to 10% each.
Turnover toppers included Reliance Industries (Rs 124.26 crore), Mc Dowell
(Rs 92.97 crore) and Reliance Capital (Rs 70.34 crore). Notable block deals
of the day included that of 1 lakh shares at Rs 359 per share on TV 18, and
of 1.96 lakh shares at Rs 225 per share on Panacea Biotech. Two block deals
took place in Asian Paints, of 1 lakh shares each, at Rs 470 per share. The
auto sector proved nervous on concerns that an increase in retail prices of
petrol and diesel is on the cards on the back of crude oil prices surging
over $70 a barrel in the international market. Tata Motors shed 1.32%, Bajaj
Auto shed 1.99%, Hero Honda shed 1.62%, Mahindra & Mahindra (M&M) lost
1.07%, TVS Motor shed 1.02% and Swaraj Mazda shed 1.86%

Sensex proves flat after 140-point oscillation

The Sensex further recovered from the lower level, after fresh buying
interest returned in the heavyweight counters. After opening 13 points
higher from its previous close of 7693, the Sensex gained marginally to hit
a high of 7700. Immediately, the Sensex tumbled to a hit a low of 7566. At
14:02 IST, the BSE Sensex was trading at 7622, after hitting a low of
7566.21 points. The Sensex managed a smart recovery of 65 points from the
low of the day. The high for the day was 7699.56 points. he Sensex has so
far seen a swing of 140 odd points on intra day basis. The choppiness is
attributed to the rising oil prices which surged to over $70 a barrel mark
in the international market. There are reports that Hurricane Katrina shut
oil production in the US Gulf of Mexico.
The total turnover by this point of time amounted to Rs 1920 crore. The
advance decline ratio turned strong after remaining weak in morning trades
at close to 1.5:1. About 1,595 shares advanced and 962 shares declined.
About 41 shares remained unchanged.

Among Sensex stocks, 22 shares were trading lower while 8 shares were
trading with gains.
Bajaj Auto lost 2.56% to Rs 1367.10 on volumes of 7348 shares. HDFC lost
2.44% to Rs 869.95 on volumes of 33164 shares. Ranbaxy Labs was trading
lower by 2.5% to Rs 516 on volumes of 80859 shares. Bharti Tele was trading
firm, up by 2.93% to Rs 319.6, on volumes of 3.13 lakh shares. Infosys
advanced 1.25% to Rs 2298.3 on volumes of 90273 shares while Hindalco added
0.72% to Rs 1373 on volumes of 12412 shares.

The BSE Midcap Index was trading lower by 0.09% while the BSE Smallcap index
was trading higher by 1.12%. The BSE Bankex was trading lower by 1.22% and
the BSE PSU index was down 0.84% among others.

Among the turnover toppers, Mc Dowell notched up a turnover of Rs 67.22
crore followed by Reliance Industries with Rs 59.98 crore and Reliance
Capital with Rs 56.32 crore. Side counters ABM Knowledge, Jain Studio,
Mangalam Timber, Deccan Chronicle, Bhagwati Gas, Hitachi Home Appliances and
Facor Alloys all surged 20% each. Rathi Udyog, AK Capital, VCCL, and Ginni
Silk Mill, all shed close to 10% each. Deccan Chronicle spurted 20% to Rs
357.2 on volumes of 5.14 lakh shares after the company's board meet was
scheduled for 5 September to finalise FCCB/GDR issue. Aplab was trading
higher by 3.5% to Rs 167.8 after it secured orders worth Rs 28.65 crore from
HPCL. Aftek Infosys was trading 0.56% higher at Rs 125.85 on volumes of 8.93
lakh shares after the company signed an agreement to acquire US-based V-Soft
in a phased manner. V-Soft is a customised engineering solutions provider
and has clients like HP, Honeywell, Microchip, Alcatel and Cisco System.

Aplab rose 2.7% to Rs 166.60 after the company said it has received a Rs 28.65-crore order to supply petrol pumps to state-run HPCL.

However, the stock pared gains. It came off the day’s peak of Rs 170.30. 1
lakh shares changed hands in the counter on BSE. The stock surged in the
past two days ahead of the announcement. From a low of Rs 151.80 on 24
August 2005, the scrip rose 6.8% in two trading sessions to Rs 162.20 on 26
August 2005. The stock spurted in the past one year. It galloped from a
level of Rs 37 in late September 2004. Aplab specialises in designing,
developing, manufacturing and marketing of high quality professional
electronic equipment and power systems, and also supplies custom-made
instruments and systems, which are marketed under the Aplab brand name. Its
units are situated at Thane and Bhosari, Pune. For Q1 June 2005, the company
reported a 4% growth in net profit to Rs 0.52 crore from Rs 0.50 crore in Q1
June 2004. Net sales rose 1.9% to Rs 17.55 crore (Rs 17.21 crore).

Merger proposal boosts Clariant Group companies

All three scrips - Clariant (India), Colour Chem and Vanavil Dyes - surged
after Clariant (India) said its board has decided to amalgamate the Clariant
Group of companies in India. Vanavil Dyes jumped 9% to Rs 68.90, Colour Chem
rose 9% to Rs 293 and Clariant (India) gained 7.7% to Rs 331. 31,030 shares
changed hands in Vanavil Dyes, 26,537 shares got traded in Colour Chem and
10,606 shares changed hands in Clariant (India). Ahead of the announcement,
shares of Clariant (India) surged. From a low of Rs 268.15 on 9 August 2005,
the stock spurted to a high of Rs 310.35 on 19 August 2005. It later came
off the higher level before bouncing back from the lower level on 26 August
2005 on the eve of the announcement. Colour Chem stock witnessed a bout of
volatility recently with a negative bias. Vanavil Dyes was range bound.
Swiss MNC Clariant International has three listed companies in India -
Clariant (India), Colour Chem and Vanavil Dyes. Bansi S Mehta & Company,
chartered accountants and N M Raiji & Company, chartered accountants have
been appointed as the valuers for determining the "swap ratio" for the
purpose of amalgamation. Clariant (India) – the 51% subsidiary of the Swiss
MNC Clariant International – is a market leader in textile chemicals and
leather dyes and has improved its market share in paper dyes and chemicals.
For the quarter ended June 2005, the sales of the company grew by 17% to Rs
90.12 crore. Net profit rose 18% to Rs 5.79 crore. Colour Chem is a leading
manufacturer of organic pigments, dyes and dye intermediates and specialty
chemicals in India. The company was incorporated in 1956 with technical and
financial collaboration with Bayer AG and Hoechst, which became a part of
Hoechst in 1990. Subsequently, due to the merger of the specialty chemicals
division of Hoechst AG with Clariant AG in 1997, Colour Chem became a part
of the global Clariant Group. For the quarter ended June 2005, the revenues
of the company increased by a paltry Rs 0.27 crore to Rs 99.15 crore. Net
profit declined 26% to Rs 6.2 crore. Vanavil Dyes & Chemicals is a
subsidiary of Colour Chem. Vanavil Dyes manufactures specialty chemicals
like pigments and pigment intermediates. Colour Chem has 56% stake in
Vanavil Dyes.

United Western Bank slips

United Western Bank lost nearly 4% to Rs 69 after the company’s board
announced a lower-than-expected 1-for-5 ratio for bonus shares. 76,201
shares were traded in the counter on BSE. The stock had witnessed a sharp
rally recently after the company stated, on 18 August 2005, that it would
decide on proposal for bonus and rights issue. From Rs 53.95 on 17 August
2005, the stock rose 35.4% in just two trading sessions to Rs 73.10 on 19
August 2005. The stock experienced a bout of volatility later, moving in the
range of Rs 68.35 to Rs 72.20 since 22 August 2005. Besides a 1:5 bonus, the
company’s board has also declared a 1:2 rights issue on post bonus holding
at a price of Rs 24 (including premium of Rs 14 per share). The move to
raise capital is for the purpose of enhancing capital adequacy ratio and
increasing net worth. UBI’s net worth is much below the Rs 300 crore
stipulated by RBI. The bank’s capital adequacy was at 4.8% at end of last
fiscal. The RBI guidelines on private ownership mandates banks to increase
the capital base to Rs 300 crore over a three-year period.
UWB had gross NPAs is around Rs 450 crore (10.7%), and net NPAs are Rs 232
crore (5.97%) at the end of last fiscal. At present, UWB has three major
shareholder groups - the Mumbai-based Makharias hold around 10 per cent;
Sicom, the investment arm of the Maharashtra government, holds another 9.91
per cent and the bank employees' unions hold 8.14 per cent. The private
sector commercial has a network of 230 branches spread over 47 districts in
9 states.

Auto scrips skid as oil hits record high of $ 70 a barrel

Auto scrips dropped today amid concerns that an increase in retail prices of
petrol and diesel is imminent. Tata Motors shed 2.7% to Rs 459.85, Bajaj
Auto shed 2.6% to Rs 1,366 and car major Maruti Udyog (MUL) shed 2.2% to Rs
462.90. Ashok Leyland lost 2% to Rs 27.15, Hero Honda shed 2% to Rs 638.50,
Mahindra & Mahindra (M&M) lost 1.7% to Rs 715 and TVS Motor shed 1.4% to Rs
2.5 lakh shares changed hands in Ashok Leyland, 1.3 lakh shares got traded
in Tata Motors, 46,838 shares got traded in MUL, 39,763 shares changed hands
in M&M, 13,023 shares changed hands in Hero Honda and 37,643 shares changed
hands in TVS Motor.
Last few weeks have seen volatility grip auto stocks due to alternate bouts
of buying and selling. Recently, most auto stocks came off the higher level
when a major correction gripped the bourses.
An increase in retail prices of petrol and diesel is imminent following a
sharp surge in global crude oil prices. The government has so far refrained
from oil price hike due to opposition from left parties which are supporting
the ruling UPA government at the Centre from outside. US crude oil price
today hit a record high of above $ 70 a barrel as Hurricane Katrina shut oil
production in the US Gulf of Mexico.

Smooth sailing for GE Shipping on restructuring proposal

Shipping major GE Shipping surged in early trade after the company said its
board will meet on 31 August 2005 to consider proposals for restructuring of
its business. The stock was up 5% to Rs 178.50 by the first one hour or so
of trade. 3.9 lakh shares changed hands in the counter on BSE.
Although no details were available, as per market talk, the largest private
sector shipping company might be considering spinning off the offshore
business into a separate company. The offshore business constituted 12% of
GE Shipping’s revenue and 9% of net profit in the financial year ended March
For quite some time now, the market has been agog with talk that GE Shipping
may separate its offshore business into a separate company. The stock
spurted in the past few months driven by such rumours. From a low of Rs
132.65 on 30 June 2005, the stock rose 36% in a short while to hit a high of
Rs 180.45 on 17 August 2005. The stock came off the higher level later when
a major correction gripped the bourses.
The optimism about such a restructuring was on the reckoning that the
demerged offshore business would attract much higher discounting on the
bourses when compared to the shipping business. Shareholders of GE Shipping
would get shares of the new business entity which would be carved out of the
offshore business.

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