Convergence scrips lead Sensex recovery

A. Srikanth

THE week was marked by a high degree of volatility as speculation about the oil price hike and profit warnings by leading tech firms at the Nasdaq significantly influenced investor expectations.

The markets lost value on two days and gained on three other days to finally end in positive territory. The rally in convergence stocks was responsible for the Sensex netting a gain of 85.34 points to close at 4,088.83. However, the BL-250 Composite Index, a more broad-based index, ended up with a marginal loss of 2.35 points to close at 1,199.66.

Despite a broad-based recovery in the convergence sectors, the markets witnessed some amount of selectivity. In computer software, Infosys Technologies, Mastek, Satyam Computer and Hughes were the only gainers. In computer hardware, Wipro, Global Telesystems, CMC, Digital Equipment and HCL Technologies were the only gainers.

While Zee Telefilms gained significantly on the back of positive forward-looking statements, Himachal Futuristic and VSNL also went up sharply during the week.

Global oil prices firmed up again after a brief slack in prices. The stock of Reliance Petroleum gained significantly during the week. However, all the other stocks, namely MRPL, Cochi Refineries and Chennai Petroleum lost value.

The HDFC Bank stock was the sole gainer in the finance sector.

Despite the slowdown in the manufacturing sector, stocks in industrial services, engineering-capital goods, auto ancillaries, petrochemicals, paper & pulp, air conditioners, textiles and engineering-engines & power plants gained significantly during the week.

While Gujarat Gas led the Industrial Services index, Reliance Industries gained on the back of reports of sustained demand for polymers. The company increased its polymer prices recently in reaction to the firming-up of global feedstock prices.

Alfa Laval was a surprise gainer during the week. The stock went up by Rs 21.75 to close at Rs 180.25. It has moved up from Rs 129.10 in mid-September to the current levels.

Indian pharmaceutical firms did better compared to their multinational counterparts. However, the overall sentiment was low as just Cipla, Dr. Reddy's Labs and Ranbaxy posted gains during the week. Barring E-Merck, most multinational pharmaceutical companies lost value during the week.

All major FMCG sectors including consumer products, personal products, detergents and food & dairy, lost value during the week. Except for P&G, all the other major stocks in the FMCG sectors lost value. According to reports, the FMCG sectors are expected to post lower revenue-growth rates on account of floods on the North and Eastern parts of the country.

Other losers for the week include metals (non-ferrous), petroleum-exploration & production, housing finance, plantations and steel (flat products).