Waiting for the Budget

STOCK MONITOR

The BSE Sensex declined 13.60 points last week to close at 4769.99.

Media major Zee Telefilms contributed the biggest percentage-wise decline among scrips, crashing 8.66 per cent. Old economy counters HPCL and Tata Motors were also among leading culprits as they moved down by 4.47 per cent and 4.44 per cent respectively.

The bearish outlook on PSU banks and pharma sector led to downsides in SBI (4.11 per cent), Cipla (4.08 per cent) and Dr Reddy's Labs (3.98 per cent). The two scrips with the highest weightage in the index, Reliance Industries (2.97 per cent) and ONGC (1.65 per cent), also declined last week.

However, despite the overall downturn, further losses for the index were abated by gains in metal stocks such as Tata Steel (5.58 per cent) and Hindalco (5.57 per cent). Technology major Wipro (5.56 per cent) was also among the gainers, followed by cement scrip Gujarat Ambuja Cements (5.46 per cent).

With the markets eagerly awaiting the Budget to be presented on July 8th, players are expected to adopt a wait-and-watch policy this week. However, according to analysts, the current downturn offers an opportunity for bargain hunters.

Stock to watch

RELIANCE INDUSTRIES
Last week's close (Rs) 431.60
Prev. week's close (Rs) 444.78
Week's high (Rs) 449.00
Week's low (Rs) 409.08
Last week's ave. daily turnover (Rs cr) 533.64
Prev. week's ave. daily turnover (Rs cr) 386.48
Futures close NT
Number of up/down move 2/3

RIL's stock failed to react to the news of the company's overseas acquisition, much to the surprise of many. The stock remained subdued. In fact, it lost around 3 per cent after moving 40 price points.

Volumes, meanwhile, recorded an increase of 38.34 per cent at the bourses. RIL has acquired Frankfurt-based Trevira GmbH, an erstwhile division of the German giant Hoechst AG.

The acquisition, which gives Reliance an entry into the European market, will raise the company's capacity to 1.8 million tonnes, making it the world's largest producer of polyester fibre and yarn. Reliance now has an installed capacity of 1.1 million tonnes.

The company has also set out a plan to add an additional half-a-million tonnes per annum of polyester capacity over the next two years. It also announced a gas find off Orissa coast.

Initial estimates indicate that the in-place volume of gas in the exploration block is about 4-5 trillion cubic feet. The company also plans to invest Rs 2,500 crore in oil exploration over the next two-three years.

RECAP: TATA POWER
The scrip reversed direction last week, closing 3.40 per cent down at Rs 228.95.

Stock of the week

NATIONAL ALUMINIUM
Last week's close (Rs) 135.05
Prev. week's close (Rs) 125.43
Week's high (Rs) 135.90
Week's low (Rs) 124.33
Last week's ave. daily turnover (Rs cr) 12.41
Prev. week's ave. daily turnover (Rs cr) 6.71
Futures close NT
Number of up/down move 4/1

National Aluminium turned out to be a star in the otherwise subdued market. The stock registered an increase of 7.7 per cent at the exchanges while volumes recorded a whopping 71.4 per cent rise.

In fact, aluminium stocks across the bourses were gainers on the news of price recovery. Market players are of the opinion that a rise in the price of aluminium on the London Metal Exchange (LME) activated these scrips.

LME aluminium prices recovered in May-June 2004 after a fall following the Chinese government's decision to take steps to slow down its economy.

LME aluminium price surged to levels of $1681 per tonne at end of May 2004 from levels of $1653 per tonne at the end of April 2004.

Currently it has further increased to $1716. Analysts say the recovery in global aluminium prices has been due to strong demand globally as well as domestically. The growth in aluminium consumption in India is expected to be about 7 per cent for FY05 following a healthy demand from construction and transport sectors.

RECAP: RANBAXY
The stock was flat for most of the week, declining 0.65 per cent to close at Rs 903.30.

Mid-cap mover

MERCK
Last week's close (Rs) 462.63
Prev. week's close (Rs) 374.95
Week's high (Rs) 472.35
Week's low (Rs) 371.28
Last week's ave. daily turnover (Rs cr) 4.72
Prev. week's ave. daily turnover (Rs cr) 0.49
Futures close NT
Number of up/down move 5/0

Merck witnessed buying support in spite of potentially damaging reports about the fraud squad of the National Health Service (NHS), England slapping a £100 million (Rs 840 crore) recovery claim in the British High Court against Generics UK, a subsidiary of the German pharmaceutical giant Merck and Ranbaxy UK, the British arm of the Indian generic drug manufacturer Ranbaxy.

In fact, Merck's share closed last week 23.3 per cent higher than its previous weekly close. Dealers say the rise is on account of increased expectations that the verdict may be in the pharma major's favour.

The British health authority has launched its biggest compensation suit after the discovery of an alleged price-fixing cartel that ran from 1997 to 2000.

These two companies allegedly overcharged for the supply of the ulcer drug, ranitidine. NHS had earlier slapped such a law suit against Ranbaxy UK among six other firms for keeping up the price of penicillin.

RECAP: PANTALOON RETAIL
The scrip crashed 5.79 per cent last week before settling at Rs 318.65.

Small-cap mover

SSI
Last week's close (Rs) 122.42
Prev. week's close (Rs) 111.93
Week's high (Rs) 123.95
Week's low (Rs) 102.00
Last week's ave. daily turnover (Rs cr) 1.88
Prev. week's ave. daily turnover (Rs cr) 0.79
Futures close NT
Number of up/down move 2/3

SSI was among the gainers last week, rising around 9.3 per cent over its previous weekly close. Buying at the counter may be attributed to news of the company approving an increase in FII holding limit to 74 per cent from 49 per cent.

Gains in frontline tech counters also helped sentiments at the counter, dealers say, adding that the move would reflect positively on the company's fiscal condition.

Meanwhile, the company plans to utilise Rs 143.64 crore for adjusting the deficit arising due to transfer of its IT services business to Scandent Network.

RECAP: BERGER PAINTS
Flat trading was witnessed at the counter, with the scrip losing 0.84 per cent at Rs 118.