Crude, outflows ensure a flat run

STOCK REPORT

Key indices ended flat in thin trade on Tuesday. Dealers said the net foreign fund outflows on Wednesday and Thursday, and fears that crude oil prices could climb higher following Iran's belligerent nuclear stance, led investors to turn cautious, dealers said. Bhel was the top Nifty gainer, up 6 per cent. Most bank shares ended lower.

The Bombay Stock Exchange's Sensex closed at 7768.24, up 0.75 point from Friday's close. The National Stock Exchange's Nifty ended at 2369.80, up 8.25 points.

The market breadth on BSE was positive, with 1,789 shares rising and 787 retreating.

Abhijit Chakraborty, assistant vice-president, institutional sales, Prabhudas Lilladher, said the market looks ripe for a correction, technically as well as fundamentally.

"The Sensex is likely to move in a range of 7400-7650 in the short, medium term. The index has key support at 7450 level," he said.

For the market to sustain its current levels, he said fresh inflows of nearly Rs 1,000 crore are required every day.

"FII inflows are slowing down and crude oil staying above $65 spells major concern to the near-term trend of the market," he said.

Foreign funds net sold shares worth $0.05 million on Thursday. So far in August, they have net bought shares worth $683.2 million.

Chakraborty said the market had overlooked the crude oil aspect due to high liquidity. "It has to show effect at some point. It (rising crude oil prices) is bound to affect stocks' earning potential,"

Bhel spurted on hopes that the government is likely to push for the sale of a 10 per cent stake in the company. Bhel was not among the 13 companies listed by finance minister Chidambaram in which the government will not sell strategic stake, dealers said.

The 13 public sector companies include Nifty majors""Shipping Corp of India, National Aluminium Co, and Hindustan Petroleum Corp.

HCL Technologies, Sun Pharmaceutical, Shipping Corp, Steel Authority of India, ABB, Bharti Tele-Ventures, National Aluminum Co, Tata Tea, ACC, Hindalco and Hindustan Lever gained 2-3 per cent.

Bank shares were the most prominent losers, with CNX Bank index shedding over 1 per cent at 4213.00 points.

Grasim Industries, HDFC Bank, Hero Honda, Bharat Petroleum Corp, ICICI Bank, Dr Reddy's, Reliance Energy, Mahindra & Mahindra, Oriental Bank of Commerce, and Dabur India ended 1-2 per cent lower.

According to a news report a reduction in natural gas supply from ONGC's Bombay High fields has forced companies such as Grasim Industries and Ispat Industries to cut their production by 40 per cent. Dealers said it would begin to reflect in the second quarter earnings of these companies, affecting the medium-term trend of the market adversely.

In key developments today, ITC said it would invest Rs 2,500 crore to set up a 200,000-tonne-per-annum integrated pulp and paper unit in India.

ITC ended 0.5 per cent up at Rs 1,700.45.

Ranbaxy Laboratories head Malvinder Singh said the company was in talks to buy out "similar sized companies."

Videsh Sanchar Nigam said it has cut international bandwidth tariff by up to 45 per cent.

VSNL shares ended nearly 1 per cent down.

The CNX Midcap ended marginally up at 3622.70 points after hitting a high of 3640.50 earlier in the session. Hindustan Organic Chemicals rose 31 per cent to Rs 55. Morepen Laboratories and Supreme Industries gained around 20 per cent each.