After two consecutive weeks of profit booking on the bourses, the indices finally found some stability during this week's trading. The week was 'largely' characterized by consolidation with the indices trading in a range for three of the five trading days before breaking out on Friday smartly.

Thanks to Friday's gains, the indices managed to end the week on a positive note with the Sensex and the Nifty gaining 1.6 per cent and 1.3 per cent, respectively.

After last weeks bear carnage (down about 5 per cent) on the bourses, this week's opening on Monday was not much of a surprise, which was on a feeble note. With no specific reason for the sell-off being witnessed on the bourses over the last fortnight, it largely seemed that investors were struck by panic more than anything else during Monday's trade.

Factors like liquidity crunch owing to financial year end commitments, caution prior to March quarter results and the soon to be held general elections continued to play on investor sentiments.

Post last Monday's weakness, the indices traded in a narrow range for the following 3 trading sessions as lack of news flows kept the indices' upside and downside capped. However, Friday's trade saw a reversal in the mood, as investors embarked on a buying spree across sectors.

Apart from the smooth rollover of the derivatives positions on Thursday, there was no other news during the week and it largely seemed a case of bargain hunting at lower levels.

Now, considering some stock specific activity, Petronet LNG (PLL) debuted on the markets on Friday at a 7 per cent premium (offer price Rs 15) on the bourses this week. The company is promoted by four Navratna PSUs, namely BPCL, ONGC, GAIL and IOC holding 12.5 per cent stake each. The company has set up terminals for the import of liquefied natural gas and has regassification facilities.

PLL set up its first terminal with a capacity of 5 MMTPA (million metric tonnes per annum) at Dahej in Gujarat and plans another 2.5 MMTPA terminal in Kochi. The regassified natural gas shall then be sold to GAIL, IOC and BPCL in a 60:30:10 ratio, respectively. The stock however closed 2 per cent below its offer price.

While the indices traded in a narrow range for most part of the week, select activity was witnessed amongst the index stocks. Tata Chemicals (up 9 per cent) was the biggest gainer amongst the Nifty stocks this week. Others among the top 5 included Bharti Tele (up 8 per cent) and Reliance Energy (erstwhile BSES) (up 7 per cent).

The gains in Bharti Tele was owing to the news that it would start operations in six new circles by mid-FY05, requiring investment of Rs 3.5 billion per circle. The company also plans to double its capacity from 2 billion call minutes to 4 billion call minutes in the next fiscal and further expand its subscriber base from 6.5 million to 11 million.

Further, the news with respect to Reliance Energy this week was that it has received approval from RBI's empowered committee for the country's largest ever ECB (external commercial borrowing) of $1.5 billion for the Rs 100 billion power project in UP. The power from the project shall be used partly by Reliance Energy's distribution companies in Delhi and Mumbai.

Coming to the losers' list now, MTNL topped the week with losses of 6 per cent, followed by SAIL (down 6 per cent) and Glaxo (5 per cent). The outlook towards the SAIL stock turned weak on the back of the news that the company may have to import larger quantities of coke (one of the major raw materials for steel industry) or cut back production at some of its units because of TISCO (down 3 per cent) deciding to cut the coke supply.

As a result, SAIL will have to import higher quantity of coke from international markets. Now, since international prices of coke are on higher side, it may force SAIL to cut down production for sometime, which could affect its topline by Rs 500 million.

Further, we would like to advise investors here that with concerns related to China's 'over-heated' economy going strong, utmost caution needs to be practiced as a slowdown in Chinese steel consumption could have a serious negative impact on international steel prices and consequently on steel stocks.

The indices had undergone a significant correction (approximately 14 per cent) during the last couple of months. The reasons being cited for this included liquidity crunch created owing to the slew of IPOs (largely by the government) that hit the markets and financial year-end commitments by investors as they re-shuffle their investments.

Uncertainty with respect to the general elections seemed to have also played a key role. However, going forward, such intermediate corrections, with no change in the underlying fundamentals, offer good opportunities to long-term investors for investing in stocks at attractive entry levels. Happy Investing!

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