BOMBAY, 17 August 2003 — The Indian stock markets had a cautious week of trading. The undertone of the market remains bullish on account of strong fund inflows made by FIIs following hopes of good economic growth. To a large extent, buying by FIIs has been the driving force for the market. Their cumulative inflow in 2003 has reached Rs. 13,169.70 crore (till 13 August 2003).
On Monday, selling manifested on opening due to the market regulator Securities and Exchange Board of India’s decision to debar former Alliance Capital fund manager Samir Arora from the securities market with immediate effect. But soon it was seen that trades picked up and selling was largely limited to the stocks customarily fancied by Arora, who was known to trade mainly in midcaps stocks.
The BSE ended with a modest gain of 9.65 points at 3,893.41. Gains, however, continued in select Old Economy and defensive stocks. Steel shares were up. Reports that exports of iron and steel to China amounted to $621 million, up 1,452% led to this surge. Sail, Essar Steel, Tisco, and Tata Sponge Iron were among the major gainers.
On Tuesday, trading was quite volatile and finally, selling outweighed buying and the BSE broke the winning streak of the past few sessions. The BSE settled with a small loss of 4 points at 3,889.41.
IT stocks were down. There were reports that General Electric plans to renegotiate the billing rates for its Indian IT vendors in September, which may entail a change in most existing vendor contracts to fixed price, from the time and material (T&M) contracts at present. This dampened the moods and investors adopted a cautious approach in IT stocks.
BHEL touched a new high on news that it had won a contract worth Rs 1,410 core for setting up the 1,000 MW Stage-II of NTPC’s Kahalgaon Super Thermal Power Project (STPP) in Bihar. Ranbaxy Labs saw selective buying support after the company received an approval from the US Food and Drug Administration to launch a new dosage of the amoxicillin antibiotic.
IDBI was up after the Union Cabinet approved amendments to the IDBI (Transfer of Undertakings and Repeal) Bill, 2002, facilitating transformation of the institution into a bank. However, it will continue to be owned 51% by the central government and continue with its current primary function of development financing.
Aluminum scrips like Indian Aluminum and Madras Aluminum surged upward following a firm trend in the global aluminum prices. ONGC ended lower on selling pressure after its employees called for an indefinite strike to protest against a helicopter crash on Monday, in which at least 27 of its employees were killed.
On Wednesday, the government introduced the Banking Regulation (Amendments) and Miscellaneous Provisions Bill 2003 in the Parliament. This Bill seeks to facilitate amalgamation in the banking sector and provides for a mandatory minimum capital requirement for banks. The passing of this Bill, immediately led to buying in private sector banking stocks on expectations that large multinational banks may expand base in India through acquisition of private sector banks.
The BSE Sensex closed well above the 3,900-mark at 3,926.07, up 36.66 points. Oil stocks moved up further. Part of the buying in these stocks was attributed to sound annual and quarterly financial performance.
Buying in the BPCL counter was however attributed to reports that the company has submitted a bid to buy out a state owned refiner in Sri Lanka. The PSU petroleum giant is also reported to be scouting for similar opportunities in Bangladesh.
On Thursday, ahead of the long weekend, traders preferred to keep their positions closed and resorted to selling. The Sensex closed down 4.87 points at 3921.2. The metal stocks were the stars of the day with Sail hogging all the attention in this sector. Talk about a possible increase in steel prices spurred renewed interest in this sector.
Tata Motors was up. In fact the stock has seen a strong rally over the past few days, driven by improvement in the company’s fundamentals, most notable being the company’s cash-flow turning positive.
Cement stocks surged for the second successive day on expectations of a post monsoon hike in cement prices.
The auto counters like Ashok Leyland, Telco, Bajaj Auto remained firm as the surge in July sales numbers gave hope to the investors in these counters. The inclusion of Maruti in the MSCI index was seen as a definite positive for this stock. Ranbaxy Lab was again up. The market seems impressed with the company decision to shift to specialty business.