As dull as ditchwater!

Markets continued with their rangebound trading pattern right through the final hour of trade today as alternate bouts of buying and selling restricted the indices from indicating any specific direction. However, profit booking was witnessed in key stocks from the auto, banking, energy, FMCG and steel sectors.

The BSE Sensex closed at 6,604 (down 1 point) and the NSE Nifty closed at 2,059 (down 9 points). The rupee was trading at 43.77 to the dollar.

Today was a listless day at the bourses with market participants opting to book profits at every rise taking advantage of the sharp rise that was seen on the bourses in the previous week. While trading began on a positive note today, pressure soon set in taking the market into the negative territory in the second hour of trade. Bargain hunting at lower levels, however, was witnessed that led to some buoyancy as trading progressed. However, this was followed by extreme volatility as the indices oscillated between the negative and positive territories. The day finally saw the indices close marginally in the red. Major losers among the Sensex stocks were Tisco (4%), Maruti (3%) and BHEL (2%).

Most domestic pharma companies closed today in the positive with major gainers being Matrix Labs (13%), Dabur Pharma (5%), Lupin (4%), Nicholas Piramal (2%) and Biocon (2%). These gains were seemingly led by optimism of lower taxes owing to the implementation of VAT. However, investors' should keep in mind that the March and possibly the June quarter may show some negative impact on revenues owing to VAT concerns at the trader level. Incidentally, Biocon has announced that it will consider its FY05 results and dividend recommendation on April 20. Ranbaxy was the sole loser for the day and this was a result of reports that an injunction has been issued against the company and Teva by the US courts against marketing of the generic version of Lipitor, a key brand of Pfizer (PFIZ.BO, news) . Also, Ranbaxy has decided to pay up £ 4.5 m to NHS UK against a full and final settlement towards anti-competitive claims against it made between the years 1996 to 2000.

Auto stocks were among the major losers for the day. Leading the pack were majors like M&M (3%), Bajaj Auto (BJAT.BO, news) (2%) and Tata Motors (2%). India's leading passenger carmaker, Maruti, also closed with around 3% losses. The company had earlier announced its volume sales for the month of March 2005. While total domestic sales have increased by 14.1% during the month, for the fiscal year 2005 as a whole, the growth stands at 15.8%. Higher sales in March could be attributed to additional demand for availing depreciation benefits and postponement of demand in light of price increases contemplated by auto majors. We believe that car demand is likely to grow around 10% levels in FY06. As far as Maruti is concerned, since the company has re-launched its flagship model (Maruti 800), there could be cannibalization effect on some current models (noticeably on Alto).

Selective buying was witnessed in stocks from the software sector and major gainers here included Polaris (4%), CMC (4%) and i-flex (3%). On the other hand, Hexaware (2%), HCL (HCLL.BO, news) Tech (2%) and TCS (2%) led the losers' pack. Gains in the banking products major, i-flex, followed reports that the company is contemplating spending Rs 4 bn in the current fiscal year (FY06) towards expanding its facilities in Pune and Mumbai. The development centre in Chennai will also see ramping up of capacity. The exact increase in headcount has not been given. The company is also planning to double its headcount at Equinox Corporation, a company it acquired last year, which operates in the BPO services space. Going forward, we do expect the company to show strong growth with its established position as a world leader in banking software products, however coupled with some amount of margin pressure.

Email this article to your friend -  View most popular