The Hindu Business Line : TCS price band, weak monsoon dampen sentiment

THE stock markets registered a blip on Tuesday's trading after three consecutive days of marginal gains. The BSE Sensex closed the day 17 points or 0.35 per cent lower than the previous day, at 4957.8 points.

The Nifty too slumped by an identical 0.35 per cent to close at 1566.1 points. Changes in stock values during the day's trading were swayed mainly by the TCS IPO announcement and by company-specific events.

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However, the Meteorological department's forecast of a weaker monsoon in the north-western and central belts of the country over the next few days, also appears to have dampened sentiment for some stocks.

TCS effect: Technology stocks, especially of frontline software companies, were instrumental in weighing down the indices on Tuesday. The announcement of the price band for the TCS initial public offering in the Rs 775 to Rs 900 range, made its impact felt on this set of stocks.

The offer price was said to be below market expectations of about Rs 900 to Rs 1000 per share. The lower-than-expected pricing strengthened expectations that the offer could spark off a rejig of the tech portfolios of institutional investors.

All three frontline tech stocks shed some value during the day, though the loss in value was not very large. The Infosys Technologies stock lost 2.1 per cent to close at Rs 1,447.6, Satyam traded down 1.4 per cent, at Rs 326.2 and Wipro shed 1.7 per cent to close at Rs 519.6.

The combined fall led to the BSE TECk Index sliding more than the BSE Sensex during the day's trading. The TECk Index lost 1.03 per cent to the BSE Sensex loss of 0.35 per cent for the day.

The pricing was probably also a factor in the loss of value for some Tata group stocks. Some of these companies or their subsidiaries feature holdings in TCS in their investment books and the market appears to have toned down its expectations of gains to their investment books from the TCS IPO.

The Tata Power stock lost 1.5 per cent to close at Rs 253.8, Tata Motors shed a similar percentage to close at Rs 401.5; while Tata Chemicals lost 2.3 per cent in value to trade at Rs 119.4.

Banking stocks: The BSE Bankex was the only sectoral index to register gains during the day's trading.

But this was mainly on account of the surge in the ICICI Bank stock which put on 3.4 per cent during the day's trading to close at Rs 261.8.

The stock was also the strongest gainer within the basket of index heavyweights.

Most banking stocks actually shed some value on Tuesday, with 11 of the 16 constituents of the BSE Bankex posting a loss in value.

Company developments: The L&T stock was among the strong gainers for the day, adding Rs 26.2 or 3.4 per cent to its price, before closing at Rs 792.8. The stock was catalysed by news of the company bagging a $53 million order from a UAE based company.

The ABB stock, on the other hand, took a dip after the company's results announcement for the quarter.

The stock lost 1.1 per cent after the company announced a near 30 per cent drop in net profits for the quarter. However, the company also reported a sharp surge in revenues and a strong order book of Rs 1,299 crore.

The IPCL stock surged by 2.9 per cent to Rs.164.5 after the company announced a sharp rise in its net profits for the quarter, the previous day.

Shipping Corporation (which lost 3.6 per cent), Hero Honda (lost 3.4 per cent) were the other major losers of the day.

On the other hand, CMC (up 9 per cent), Indo Rama Synthetics (up 10 per cent) and Wockhardt (up 6 per cent) were the major mid-cap gainers of the day.