Market Review

The day belonged to the Ambani brothers on the bourses. The stocks of Mukesh Ambani- and Anil Ambani-owned companies fuelled the Bombay Stock Exchange (BSE) Sensex by 216 points (1.32 per cent) to 16,564.23 points.

Reliance Industries, the Mukesh Ambani group flagship, rose 3.75 per cent to close at Rs.22,74.40. RIL has the maximum weightage in the Sensex at 14.45 per cent-- thus any move in the stock has an immediate bearing on the index.

Market observers said the stocks of both these groups were being fuelled by constant flow of positive news on these companies.

The Anil Ambani-owned Reliance Natural Resource Ltd (RNRL) shot up 35.04 per cent on news that it was applying for gas distribution licence in Mumbai, Delhi, Noida and Gurgaon. There were are also rumours in the market that RNRL could be merged with group company Reliance Energy.

''With more clarity on gas pricing, Reliance Industries could see some added earnings in the coming year, while a de-merger may take place in Anil Ambani group companies like Reliance Capital and Reliance Communication,'' said Deven Choksey, MD of stock broking firm K R Choksey.

But the key driver has been FII buying interest in the Reliance group stocks. "With FIIs hitting the permitted investment ceiling in banking stocks and IT stocks taking a back-seat, the scope for investments has narrowed. FIIs are thus favouring some Reliance group companies owing to their earnings clarity,'' added Choksey.

Stocks also rose after UBS, a global financial services major, said that domestic demand and capital goods spending would drive the Sensex to 19,000 by the end of next year.

The brokerage raised its recommendation on the banking sector to 'neutral' from 'underweight' and lifted automobiles to 'overweight' from 'neutral'.

Bharti Airtel., the country's largest mobile phone player, rose Rs 27.45, or 3.1 per cent, to Rs 918.35. Capital goods major, Larsen & Toubro Ltd, went up Rs 36.8, or 1.3 per cent, to 2,783.15.

Bharti and L&T's weightage in the Sensex stands at 5.56 per cent and 6.55 per cent, respectively.

Maruti was up 2.14 per cent to Rs 929.55, while State Bank of India was up 2.78 per cent to Rs 1808.25.

IT stocks, however, further extended their losses with Wipro and TCS touching their 52-week lows though both ended the day with positive gains. Following yesterday's dramatic sell-off, some buying interest was witnessed at IT counters.

Rebounding from lower levels earlier in the day, the Sensex gained nearly 150 points in the afternoon, ending the day at 16,564.23 points, up 216.28 points or 1.32 per cent. The more broad-based S&P CNX Nifty ended at 4837.55 points, up 90 points or 1.9 per cent.

Despite the gains in the market, the breadth in the market remained negative with 1,166 advances to 1,629 declines. ''The market gained in the last couple of hours of trading primarily as a result of short covering. Rupee appreciation along with the frenzy in the market will lead to unabated FII inflows,'' said Jay Prakash Sinha, head of research, Ambit Capital.