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Spotlight on Tata Steel, Tata Engg

Suresh Krishnamurthy

STOCK prices looked up on Tuesday on the back of improved trading volumes. In the morning session, trading sentiment was relatively positive, as the financial performance of Infosys Technologies did not produce any negative surprises for the markets.

Trading in technology stocks also remained in positive territory during this period. However, this optimism was not sustained as concerns over the pressure on billing rates of technology companies overwhelmed the sentiment. Consequently, a few frontline technology stocks led by Infosys finished the day on a weak note.

There was no such problem with economy-linked stocks as buying pulled them up higher. The premier stocks from the stable of the Tatas, Tata Steel and Tata Engineeringended the day with significant gains buoyed by rising trading volumes. Both the stock re gistered a gain of around 7.5 per cent.

The narrow indices of Sensex, Nifty and the broad based index of S&P CNX CRISIL 500 gained just a little over 1 per cent during the day. In contrast, the CNX Nifty Junior lost value during the day. With the major constituents of the index such as Sun Pha rma, ICICI Bank and Corporation Bank recording declines, the index was south bound. These three stocks account for around 24 per cent of the index's market capitalization.

In terms of trading volumes, Tuesday represented a distinct improvement over Monday. Value-wise, volumes increased to Rs 730.88 crore from Rs 454.71 crore. Advancing shares at 633 accounted for Rs 450 crore while declining shares at 612 accounted for Rs 275 crore. However, trading volumes are still much below that recorded before the new trading system was introduced on July 2.

Other prominent gainers from among the economically sensitive stocks included Mahindra & Mahindra and Larsen & Toubro. The gains registered by the stocks of Telco & M&M appear surprising in the wake of the bleak earnings outlook for the auto sector in th e near-term as companies have been severely affected by a slowdown in demand.

Among frontline technology stocks, that which logged declined included NIIT, SSI and HCL Technologies. However, a few stocks bucked the trend. The stock of Digital Equipment rose 3.1 per cent boosted by strong trading activity. The stock of Wipro also ga ined modestly. Incidentally, in terms of trading value, the top three traded stocks were Infosys, Wipro and Digital. While the last two gained, Infosys ended in negative territory.

Though not figuring in the top traded list, the stock of Hughes Software also gained. Expectations of improved financial performance were the main sentiment driver for Hughes Software. The stock of VSNL also notched sharp gains during the day. A dividend of Rs 50 per share declared by the company revved up buying interest in the counter.

Stocks of Himachal Futuristic, Global Tele-Systems, Pentamedia Graphics and DSQ Software widely seen as speculative counters witnessed robust trading activity and ended the day among gainers.

The stock of Ranbaxy and Cipla also rose smartly helped by the earnings outlook for Indian drug companies. The stock of a few media companies such as Balaji Telefilms and Pritish Nandy Communications also remained in the spotlight.

The stock of Corporation Bank, which rose impressively on Monday in the wake of the preferential allotment of shares to LIC at a substantial premium to the ruling market price lost ground during the day.

The stock of ICICI Bank was another major loser. Apart from ICICI Bank and Corporation Bank, prominent losers during the day included stocks such as Glaxo India, Hero Honda and Sterlite Optical. The stock of Glaxo India ended the day close to its 52-week low.