Inflation fall solace

STOCKS REPORT

The markets were on a roll on Friday with the BSE bellweather Sensex closing up 1.52 per cent or 83.47 points at 5561.15, a four month closing high.

The rally was driven by the easing in the inflation figures released by the government as well as expectations of good second quarter corporate earnings. The NSE's Nifty index gained 1.64 per cent or 27.95 points to close at 1733.65.

The rally was led by banks, auto, steel and consumer goods stocks.

The annual inflation rate fell to 7.81 percent in the year from a high of 8.33 percent a week before. Gainers were almost on par with losers on a day which saw a lot of activity on the bourses. A total of 18.2 crore shares were traded on the BSE. So far, the index has gained 3.6 per cent this week.

Dealers said that there has been a shift from mid-cap stocks to top line stocks as investors are expecting corporates to show improved results. Some correction is expected but in general the market is betting on index rising another 300 points by the end of the month.

Among banks, State Bank rose 3.3 per cent to Rs 480.50, while Vijaya Bank rose 3.1 per cent to Rs 47. The government said that it would be open to banks raising capital through issuance of preference shares.

Bank of India went up 8.6 per cent to close at Rs 51.65, while Union Bank of India went up 0.83 per cent to close at Rs 72.55 both on reports that the two banks would be merged.

Meanwhile, another index heavyweight Reliance Industries rose 3.7 per cent to close at Rs 509.25 on weaker global crude prices and firm polymer prices.

Among steel stocks Steel Authority closed up 4.7 per cent at Rs 43.15. Among auto stocks, Tata Motors closed up 4.4 per cent at Rs 405.75. The company said that it would listing on the NYSE by the end of this month. Consumer goods stocks also made gains on a good monsoon while the government has announced cuts in base import prices of edible oil.

Hindustan Lever Ltd. rose 1.6 per cent to Rs 125.75, ITC gained 2.8 per cent to Rs 1,174.10.

Other stocks which gained included Bharti Tele-Ventures, up 2.8 per cent to close at Rs 149.60, after it said it is launching a $50 million venture to export fresh fruits and vegetables. Tech stocks were, however, weak.

Satyam Computer closed down 1.73 per cent at Rs 380.45, while Infosys closed down 0.33 per cent at Rs 1,689 both on selling pressure. Bank of Rajasthan closed up 4.42 per cent to close at Rs 40.20 on hectic buying interest especially from foreign buyers.