Date:08/07/2006 URL: http://www.thehindubusinessline.com/2006/07/08/stories/2006070803561500.htm

Back Profit booking leaves a weak note

Sowmya Sundar

Trading highlights
Govt decision to hold back PSU divestments weakened the sentiment further
Mid-cap cement stocks shine on hopes pick-up in demand
Select auto-ancillary stocks shine

The markets closed on a weak note as profit booking took place across the board. The Sensex and the Nifty have risen about 20 per cent in the last four weeks after the recent meltdown.

Even as concerns such as rising interest rates and inflation continue to weigh on equity valuations, the Government's decision to hold back divestment of public sector undertakings provided yet another strong reason to take profits. The markets closed on a weak note for the week after a three-week bull run.

Action in cement

The mid-cap cement sector was on fire. Cement demand is expected to pick up on Government's sustained focus on infrastructure development, expansions undertaken by companies in manufacturing, IT and ITES companies and the real estate boom. Given the strong growth prospects and the possibility of a further round of consolidation, mid cap cement companies have been on an uptrend. Cement companies across the board such as OCL, India Cement, Sri Dig Vijay Cements, JK Cements, Kesoram Industries and Shree Cement were on the buy list on a rather dull day.

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Real estate

Real estate stocks baring Unitech were in the losers list. Unitech continued to hit the upper circuit filter at five per cent. Bombay Dyeing, BF Utilities, Lok Housing, Ansal Buildwell, Ansal Housing, Mahindra Gesco, Bata India and Bombay Dyeing dipped.

Select auto ancillary stocks such as Sono Koyo Steering, Motherson Sumi and Jay Bharat Maruti, Ramakrishna Forgings bucked the broad market trend and inched up. Ramakrishna Forgings was up 8 per cent backed by substantial surge in volumes. On the other hand Bharat Forge lost heavily. Tractor stocks such as Eicher Motors, Escorts and M&M saw heavy selling.

Profit booking

Profit booking was seen across the board, frontline FMCG and IT stocks too witnessed selling pressure. IT stocks were the hot favourite over the last four weeks. In a week when most other sectors witnessed profit booking, some buying was seen in banking stocks.

The BSE Bankex index closed marginally positive for the week and lost the least for the day. However, ICICI Bank was the only gainer in the index for the day. South Indian Bank too witnessed substantial surge in volumes accompanied by a three per cent rise in the share price.

Gainers & losers

Some of the stocks that gained on huge surge in volumes are UT, Tata Coffee, Steelco Gujarat, Color Chips, Nelco, Visaka Industries, Voltas, Madhucon Projects, Alembic and Avaya Globalconnect. Tata Coffee continued the uptrend on the back of the acquisition of Eight O' Clock, a US based coffee manufacturer and distributor.

The acquired company is almost twice its size and is expected to help it become an integrated coffee player. Aegis logistics, Agro dutch industries, Alstom Projects, Balrampour Chini, Cummins India, Indo Rama Synthetics, VSN L, IVRCL, MTNL, Reliance Industries and GTL were some of the major losers. GTL was down 17 per cent and Reliance Industries 4.6 per cent down.