Market recovers amid choppy trade

Bargain-hunting after a steep fall, aided the bourses in what turned out to be a day of immense volatility. Buying was rampant in telecom, cement, banking shares and pharma pivotals.

Select side-counter surged, which kept the market-breadth to stay robust. Deccan Aviation (up 12% to Rs 133.85), Gateway Distriparks (up 11% to Rs 181.70), Moser Bear (up 10.8% to Rs 255), Unitech (up 10% to Rs 451.60), Forbes Gokak (up 9.8% to Rs 506), Divi’s Lab (up 9% to Rs 2744), Bombay Rayon (up 9% to Rs 224.95), Welspun Gujarat (up 8% to Rs 89.90), Nagarjuna Construction (up 8% to Rs 203), GTC Industries (up 10% to Rs 218.95), KEI Industries (up 10% to Rs 431.20), Gemini Communications (up 10% to Rs 285.85) Spanco Telesystems (up 9% to Rs 168.50), Vivimed Labs (up 9% to Rs 165), UTV Software (up 8.9% to Rs 256) and, Four Soft (up 8% to Rs 58.45) had surged.

The BSE Sensex rose 186.32 points (1.4%), to settle at 13,181.34. It also hit an intra-day high of 13,223 at the fag end of the trading session at 15:24 IST. The S&P CNX Nifty gained 48.30 points (1.3%), to end at 3,765.20.

Trading was characterised by extreme volatility today. The Sensex swung over 1,400 points between some vital intra-day tops and bottoms. It also swung 392.62 points between the day’s low of 12,830.38 and high of 13,223.

For 1,652 shares rising on BSE, 849 declined. As many as 68 shares were unchanged. Gainers outpaced losers by a ratio of nearly 2:1. The breadth improved substantially in the last half an hour of trade. It kept vacillating between positive and negative throughout.

The BSE clocked a turnover of Rs 4,404 crore, compared to Tuesday’s Rs 4,931 crore.

Unwinding of long positions in the derivatives accentuated the fall on the bourses, and the Sensex lost 977 points in three trading sessions, between 8 December and 12 December. The market wide-open interest in derivatives declined 6.4% in a single trading session on Tuesday (12 December). Aggressive offloading happened in frontline stocks, where the total open interest declined 9% that day, according to a domestic brokerage.

A lower-than-expected industrial output growth for October 2006 caused a 404-point fall in the Sensex on Tuesday (12 December), after the barometer index lost 400 points on Monday (11 December) following a surprise hike in the cash reserve ratio (CRR) by the RBI, which raised fears of a rise in interest rates.

After the latest economic data, market men will now be closely eyeing advance tax payment by corporates for the third installment, which is due on 15 December 2006. The corporate advance tax payment will provide a broad outline of Q3 corporate results. More so, given that strong earnings growth has been a key driver of the bull-run on the bourses.

Market men will also be watching FII allocations for India for calendar year 2007.

`In the last one hour of trade today, there was a good pull back. Traders were seen covering short positions and fresh new long positions were being taken as well. More appreciation is expected in mid-caps as compared to the large-caps. In the previous two or three sessions, mid-caps have taken a heavy battering and some select mid cap stocks now look quite attractive at their current valuations’, said Rajeev Nainani of Anagram Stock Broking.

Niranjan Shekhawat of HDFC Securities expects correction on the bourses tomorrow. `In the last two or three days, the banking sector has been instrumental in directing the markets and tomorrow, they might again play a influential role in pulling the markets down’, Shekhawat said.

In today’s trade, Reliance Communications surged 7% to Rs 432.90, following media reports that it is in talks with three US private equity groups, for buying the Indian operations of Hutchison Telecommunications International in a deal worth more than $14 billion. The stock rose on a heavy volume of 38.6 lakh shares on BSE.

Bharti Airtel surged 4% to Rs 601. As many as 3.2 lakh shares changed hands in the counter on BSE.

Reliance Industries rose 2.6% to Rs 1,240.50. As many as 15.5 lakh shares changed hands in the counter on BSE. Multiple block deals of 1,02,196 shares were executed in the scrip at Rs 1,231.75 a piece, on BSE. The government on Tuesday approved RIL's plan for a $5.2 billion deep-sea gas field, which will pump 80 million cubic metres per day.

Bank shares edged higher after the US Federal Reserve on Tuesday kept US interest rates unchanged. SBI surged 4% to Rs 1,230.90, ICICI Bank 2.7% to Rs 828 and HDFC Bank added 1.9% to Rs 1,050.

Cement shares rose on renewed buying at the lower level. Grasim gained 5.7% to Rs 2,650, ACC rose 3.9% to Rs 1,010 and Gujarat Ambuja Cements advanced 3.9% to Rs 135.

Pharma pivotals firmed up. Dr Reddy’s Lab surged 5% to Rs 792.50 and Ranbaxy rose 2.3% to Rs 368.

Software bellwether Infosys made a solid intra-day rebound in the last half an hour of trade. The stock rose 0.1% to Rs 2,166. Earlier, the scrip had dropped as much as 1.5% to a low of Rs 2,131.30 at 14:50 IST.

ONGC was down 2% to Rs 787.90. As per reports, ONGC is talking to France's Total SA and Royal Dutch Shell over offering a 10 - 15% stake in two Nigerian blocks.

Tata Steel lost 1.3% to Rs 434.55, on growing concerns of a bidding war with Brazil’s CSN, for acquiring Anglo-Dutch steelmaker Corus. Media speculates that Tata Steel may raise its bid to 550 pence per Corus share, raising the price to over $10 billion, to trump Companhia Siderurgica Nacional's offer of 515 pence per share.

L&T rose 2.2% to Rs 1,425, on news that L&T Infotech, the software and services arm of construction major Larsen & Toubro, on Wednesday had signed an agreement to acquire US-based GDA Technologies Inc, an electronics design services firm.

Glenmark Pharmaceuticals jumped 7.8% to Rs 552.35, after the company said on Wednesday it had applied for clinical trials for a new pain-relieving compound to be launched in 2011. Its Swiss subsidiary has applied for the first phase of clinical trials in Europe, Glenmark said in a statement. "The pain market is amongst the largest and presents an excellent opportunity," Managing Director Glenn Saldanha said.

Elecon Engineering jumped 10% to Rs 394.75, following reports that the company expects revenue of Rs 750 crore in 2006/07, up 70% from last year, riding the orders' tide, chiefly from power, cement and steel sectors.

McNally Bharat Engineering Company jumped 10% to Rs 137.20, after the company got an order for an ash handling system worth Rs 39.92 crore from Vedanta Aliminium.

Century Textiles jumped 8% to Rs 634, after the company said on Wednesday that 6,300 workers, of 6,600 working in the company's Mumbai mill, have opted for a voluntary retirement scheme floated earlier. The scrip rose on a high volume of 13.4 lakh shares on BSE.

Laxmi Precision Screws lost 4.4% to Rs 117.45, after the company said its board approved a preferential issue of equity shares at Rs 101 a share.

Flawless Diamond jumped 5% to Rs 51.45, after the firm said it had secured an order worth Rs 17.8 crore from a Swiss company

Raymond lost 1.2% to Rs 422. The company said on Wednesday, one of its units will form an equal joint venture with US-based AJ Rose Manufacturing Co for a sheet metal components facility in India. The facility is estimated to cost Rs 16.60 crore.

Britannia Industries dropped nearly 1% to Rs 1,091. The company said on Wednesday, it agreed to buy stakes in two bakeries belonging to a Middle East-based group.

Rolta India rose 1.6% to Rs 239, after the company disclosed on Wednesday that Citigroup, Mauritius, bought 0.27% stake. Citigroup Global acquired 2,18,396 shares on 5 December 2006, raising its stake to 5.19%, the company said.

i-flex was flat at Rs 2,016.50. A block deal of 1 lakh shares was executed in the scrip on BSE at Rs 2,020.50. Orcale had recently raised the open offer price as well as targetted stake in i-flex. It has raised the open offer price to Rs 2,100 from earlier Rs 1,475.

Andhra Bank jumped 8% to Rs 82, after the state-run bank said the cash reserve ratio (CRR) hike will impact annual earnings only marginally.

Simplex Infrastructure was down 1.4% to Rs 370. A block deal of 1,53,146 shares was struck in the counter on BSE, at Rs 365.75.

Jain Irrigation rose 6% to Rs 373. A block deal of 1,68,220 shares was struck in the counter on BSE, at Rs 358.

Greaves Cotton rose 2.8% to Rs 315. A block deal of 3,5,310 shares was struck in the counter on BSE, at Rs 290.

CESC lost 7% to Rs 312. A block deal of 1,87,962 shares was struck in the scrip on BSE, at Rs 290.

Solar Explosives rose 3.6% to Rs 125, after JF Asset Management purchased 2.89% stake. JF Asset Management acquired 5 million shares on November 29, Solar Explosive informed.

European shares were in the green in opening trade on Wednesday. Key benchmark indices in London, Germany and France were up by between 0.01% to 0.1%. Asian markets were mixed. Key benchmark indices in Hong Kong, Singapore and Taiwan were down by between 0.1% to 1%. Key benchmark indices in Japan and South Korea were up by 0.3 - 0.4%.

Nymex crude was little changed at about $61 a barrel.