Mid-caps do the trick

STOCKS REPORT

The equity market continued to gains for the second consecutive day. Though the market closed just a few points shy of the all-time high of December 2, 2004, Tuesday's rally was characterised by a fresh surge in mid-cap stocks.

The 30-scrip BSE Sensex closed up 56.81 points at 6325.53, after opening at 6280.56 and touching an intra-day high of 6331.57. The broader Nifty index closed up 21.45 points at 2006.80.

Dealers said that there was a rally in the broader market as well, led largely by a fresh bout of buying in mid-cap stocks from investors who did not want to expose themselves to the high valuations in the blue chips. Dealers also said that a lot of retail investors were now entering the market probably in anticipation of more FII inflows.

Mid-caps have been trading weak for sometime now as investors were booking profits in these stocks.

On the BSE gainers beat losers 1,448 to 592 with 25.8 crore shares changing hands, up from the 19.9 crore shares traded on Monday.

Meanwhile, the NSE's 200-share mid-cap index rose 1.23 per cent to a new closing high of 2,409.5 points. So far, during this year the index has gone up by 34 per cent against an 8.3 per cent rise in the Sensex.

The BSE Metal Index, which tracks the metal stocks, rose a spectacular 85.45 points to close at 5444.72 as metal stocks came back into the limelight.

Dealers said that they expected the current volatility in the front-line stocks to continue till the end of the year.

The market has been trading in a narrow range around the 6300-level for sometime and as long as the market stays in this range the movements are likely to be volatile. The trend in the markets is still being set by the foreign funds.

Overseas portfolio managers have pumped a record $7.8 billion into Indian stocks in 2004.

Old economy shares were lifted on expectations that they are likely to gain from the government's focus on infrastructure spending.

Steel Authority and Tata Steel rose five per cent and 1.2 per cent respectively. Grasim Industries rose 2.3 per cent. Automobile sales have grown 21.2 per cent year-on-year in November, and India's top car maker Maruti Udyog rose 1.2 per cent, and Tata Motors Ltd gained one per cent.

But sugar stocks fell after surging recently due to a poor crop, though traders said they should rebound as India faces a sugar shortfall. Dhampur Sugar Mills and Bajaj Hindustan fell four per cent and one per cent respectively.