Mumbai: The Railway Budget set the tone for the stock market, which today snapped a four-session losing streak and ended 17 points up, overcoming heavy pressure from Foreign Institutional Investors (FIIs).
Reduction in fares and further rationalisation of freight tariff structure in Railway Budget, particularly the cut in freight rates for iron ore prompted a strong rally in metal sector, lifting the metal index by 201.61 points.
The budget was hailed by India Inc as positive for industry as well as general public.
The Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) fell sharply to the day’s low of 13,383.88 but later recovered smartly on late buying support and ended the day at 13,649.52, a net gain of 16.99 points or 0.12 per cent from the previous close.
The Sensex had fallen by 770.37 points or 5.35 per cent in the last four sessions.
Similarly, the broader S&P CNX NIfty of the National Stock Exchange (NSE) edged up by 3.05 or 0.08%to end at 3,942.00 from the last close of 3,938.95.
Attributing the surge in metal shares to reduction in freight rates for iron ore and a sharp worldwide rally in metal prices, brokers said the gains in metal counters largely cushioned the impact of hedge funds selling.
FIIs, which had pulled out about Rs1,347 crore from Futures & Options on 23 February, were believed to be net sellers during the day.
Asian markets, however, exhibited mixed pattern of trading during the day.
ITC gained 2.3% at Rs 170. Tata Steel and Satyam rallied around 2% each to Rs 469 and Rs 457, respectively. Gujarat Ambuja has moved up 1.7% to Rs 125.
Reliance Communications, Bharti Airtel and Wipro were down 3.7% each to Rs 416, Rs 728 and Rs 601, respectively.
ICICI Bank was down 3% to Rs 880. Infosys, Ranbaxy and Reliance were down around 2.5% each to Rs 2,182, Rs 348 and Rs 1,380, respectively. Reliance and ONGC were down over 2% each to Rs 1,380 and Rs 813, respectively.
Over 1,531 shares have declined, 933 have advanced and the rest are unchanged.
Reliance Industries Ltd., which owns the world’s third-biggest refinery, fell after Chairman Mukesh Ambani said he may buy more stock through a preferred allotment.
“The preferential issue would result in earnings being diluted by about 9% as the number of shares outstanding would rise,” Vidyadhar Ginde, a Mumbai-based analyst at Merrill Lynch & Co., said in a note to clients today.
Satyam Computer Services Ltd., the nation’s fourth-largest software services exporter, rose after Credit Suisse raised its rating on the stock on expectation of higher revenue.
The S&P/CNX Nifty Index on the National Stock Exchange declined 23.55, or 0.6% to 3915.40.
The company said it’s spending $3 billion on building a chemical plant near its refinery in western India, taking the total investments announced by Ambani in the past year to more than $13 billion. Group company Reliance Petroleum Ltd. is spending another $6 billion to build a new refinery.
Satyam rose Rs14.9, or 3.3 %, to 463.65. Credit Suisse raised the rating on the stock to ‘outperform’ from ‘Neutral’ citing increased confidence in the company’s revenue growth.
“Revenue growth remains robust on improved growth from large clients,” Singapore-based analyst Bhuvnesh Singh at Credit Suisse said in the note.
Credit Suisee raised its earnings per share estimate by 10% to Rs27.4 each for the year ending 31 March 2008. It raised the stock’s target price by 39 % to Rs 625.
Overseas investors sold a net Rs2.25 billion ($50.8 million) worth of stocks on 22 February according to the latest information on the Securities & Exchange Board of India’s (SEBI) website.
The following shares rose or fell. Stock symbols are in brackets after company names.
Railway-related stocks: Indian Railways, the world’s second-largest network, will spend Rs300 billion to build dedicated freight lines and will study starting high-speed passenger train lines. The railways will also invest “several billion rupees” in expanding its container operations and plans to build triple-decker container trains to meet rising demand for transportation of goods, Lalu Prasad, the rail minister, said in New Delhi today. He was presenting the Railway Budget to Parliament.
Stone India Ltd. (STON IN) a railway service provider, gained Rs6, or 3.9%, to 160. Bharat Earth Movers Ltd. (BEML IN), a maker of railway coaches, rose Rs24.45 , or 2.2%, to 1,120.25. Texmaco Ltd. (TXM IN), which makes equipment for the railways, added Rs23.55, or 2.5 %, to 959.
Dr. Reddy’s Laboratories Ltd. (DRRD IN) rose Rs4.9, or 0.7%, to 686.8. The nation’s third-biggest drugmaker is considering making a joint bid for Merck KGaA’s generic-medicine division, the London-based Times reported, citing Dr. Reddy’s chief executive officer G.V. Prasad. Any potential bid would be made as part of a group backed by private equity, Prasad told the newspaper.
Gujarat Gas Co. (GGAS IN) gained Rs18.95, or 1.5%, to 1,320. The local unit of the U.K.’s BG Group Plc said its board approved a plan to split each of the company’s stock into five. The company also said fourth-quarter profit surged 67% to Rs182.3 million.
Ranbaxy Laboratories Ltd. (RBXY IN) slid Rs6.55, or 1.8%, to 349.9. A Danish court blocked Nomeco A/S from selling the generic version of the cholesterol drug Lipitor made by Ranbaxy, India’s biggest drugmaker, according to Pfizer Inc. The Indian drugmaker on 13 February said it started selling its version of Lipitor in Denmark as part of a plan to expand drug sales in Europe.
Tata Steel Ltd. (TATA IN) added Rs12.75, or 2.8 %, to 471.95. The nation’s biggest private steel producer may make a rights offering to raise a part of the funds needed to buy Corus Group Plc, the UK’s biggest steelmaker. Such a move won’t dilute the principal owner’s stake in the company, the newspaper reported.
Zensar Technologies Ltd. (ICIM IN) climbed Rs11.05, or 4.9%, to 239. The computer-software company has bought a unit of US-based SOA software Inc. for $24.9 million, Zensar said in an e-mailed statement on 23 February. The all-cash acquisition, the second for Zensar since 2005, gives the company access to clients in communications and media business.