Reliance, metals keep momentum

STOCK REPORT

Key indices closed at record highs on Thursday, spurred by 2 per cent gains in heavyweight Reliance Industries and sharp gains in engineering and metal shares.

Dealers said there was selling at higher levels, but buying at lower levels took the indices higher. The Nifty made a fresh all-time high of 2377.35 on Thursday.

The Bombay Stock Exchange's 30-share Sensex ended at 7797.08, up 40.61 points, or 0.5 per cent over Wednesday. The National Stock Exchange's Nifty closed at 2367.80, up 10.80 points, or 0.5 per cent. The closings for the two indices were their highest ever.

While the indices may have made new records on Thursday, the session was not all that smooth. After sharp gains in early trade, the gains tapered off later in the session. The indices went into negative territory on profit-booking.

Dealers said the market is confused about the exact implications of the demerger announced by the Reliance group on Wednesday.

"While prima facie unlocking of shareholder value is seen, it remains to be seen how much cash would ultimately flow to each entity," said a dealer.

On Thursday, Anil Ambani-led Reliance Capital gained 7 per cent and Reliance Energy nearly 1 per cent. Dealers attributed gains in Reliance Capital to the completion of its preferential issue aggregating Rs 2,673 crore.

However, some dealers dismissed the gains as mere speculator-driven, with a technical analyst cautioning investors from making fresh purchases in the stock at current levels.

The domination of the bulls was clearly evident on Thursday. Over 61 per cent of the shares in BSE's 'A' group rose, while around 57 per cent of the total shares gained in 'B1' group.

Engineering shares such as BHEL, Larsen and Toubro, and ABB rose 2.0-5.5 per cent. Metal shares too were in the limelight.

Among steel shares, the biggest gainers were Tata Steel gained, up 4 per cent, and SAIL 3.5 per cent. Shares of aluminium makers such as Nalco and Hindalco rose 2.6 per cent and 1.7 per cent, respectively.

Frontline technology shares were mixed, with Wipro and HCL Technologies ending in positive territory. The CNX IT Index, however, shed 0.4 per cent.

Shares of most frontline fast moving consumer goods ended with gains. HLL was the exception, down marginally. Most bank shares gained, while automobile and pharmaceutical shares were mixed.

Investment bank Goldman Sachs believes RIL's reorganisation plan is in line with expectations and does not expect a 'meaningful value unlocking' from the proposed plan.

"We believe the stock price already reflects a value for Reliance's core businesses and full value of investments, which is in line with our valuation," the investment bank said in a note released on Thursday.

Goldman, however, rates the proposed reorganisation plan as reasonable and transparent.

However, R Parthasarathi, head of sales at domestic brokerage Fortis Securities, is optimistic, although he did advise caution. He sees RIL hitting Rs 830-850-level in the near term.

Mitesh Mehta, vice-president, institutional sales at LKP Securities, too is bullish on RIL. He said the new foreign funds entering India would surely like to have the stock in their portfolio and this should keep the momentum on.

"Thursday's was a good broad-based rally. Frontline stocks attracted more attention on Thursday and will continue to do so," Mehta said.

The CNX Midcap index too made a new all-time high of 3525.95 on Thursday. It also made a new closing high of 3524.55, up 1 per cent.