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Market flat amid volatile trade, Sensex falls 1 point

Index heavyweight Reliance Industries (RIL) saw trend reversal from morning session and recovered from its low of Rs1738.50 to settle 0.66 per cent higher at Rs1773.25 on 10.88 lakh shares. RIL also struck a high of Rs1780 in intra-day trade, an all-time high. It had reached this all-time high of Rs1780 on May 21, 2007 as well.

RIL has been hitting record highs in the past three sessions and has advanced over 34 per cent to Rs1761.55 since its close of Rs1313.50 on April 2, 2007. It has been major drivers of the recent rally.

The RIL stock entered a sharp uptrend after it said yesterday it had made two gas discoveries in separate blocks off the east and west coasts of the country. The commerciality of the above discoveries is currently under evaluation.

Meawhile, the market which stayed in losses for most part of the day, recovered inlate afternoon session of trade as buying resumed at lower levels. The Sensex was down marginally by 0.83 points to 14,417.77, as per provisional closing.

It had opened at 14,457.26, and struck a high of 14,483.59, as buying continued. But it was not able to sustain at the higher level and succumbed to selling pressure. This selling continued till it touched a low of 14,348.26.

The market breadth, which indicates the overall health of the market, was weak on BSE, with 1,464 shares declining as compared to 1,115 that advanced, while 85 remained unchanged. This is in contrast to the positive market breadth at 10:30 IST, when 837 shares advanced as compared to 759 that declined.

The total turnover on BSE amounted to Rs5,180 crore, which picked-up in the last hour of trades as recovery continued. It was Rs4,150 crore by 14:30 hours.

Among the Sensex pack, 16 advanced while 15 declined.

For the fourth straight day, Bajaj Auto was on a losing streak, declining 2.77 per cent to Rs2186.10, as its demerger scheme, announced during trading hours on May 17, 2007, triggered a flurry of rating downgrades by brokerage houses. It was the top loser.

Disappointment about the post-demerger structure and lack of clarity about future business plans were cited as the main reasons for the downgrades.

Bajaj Auto shares slumped a little under 16 per cent in the previous three trading sessions after the surprise revelation that Allianz — Bajaj's partner in its two insurance ventures — has a 'call option' to buy up to 74 per cent at a nominal price. This was the biggest disappointment in the demerger plan.

Most analysts expected Bajaj Auto to remain the majority partner, while allowing Allianz to raise its stake up to 49 per cent. They see a high possibility of the government raising foreign investment limit in insurance sector to 74 per cent and Allianz exercising the option to hike the stake.

The insurance business of Bajaj Auto was valued at around Rs800 per share. But going by the new structure, the value has been trimmed to Rs300 per share. So the fall was more of a realignment to its fair value of Rs2,250.

Gujarat Ambuja Cements (down 2.10 per cent to Rs116.45), SBI (down 1.91 per cent to Rs 1321), and ICICI Bank (down 1.38 per cent to Rs926.90) were the other losers.

IT pivotals, which have been underperforming the market of late, were left behind as the rupee struck a fresh nine-year high. Appreciating further against the US currency, the rupee again neared the crucial 40.50 level in late morning deals. The appreciation was seen following fresh dollar selling amid absence of buyers.

The interbank foreign exchange (forex) market yesterday witnessed fairly active trade in the initial stages of trading. The domestic unit resumed firm at 40.60/62 a dollar over last close of 40.67/68 a dollar. It later traded at 40.5850/5950 a dollar in late morning deals on some dollar selling.