A new 31-month high!

Mon, 6 Sep Closing

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Buying activity extended to the closing hours of trade today. As a consequence, the benchmark indices posted some very strong gains and in the process, not only did the Sensex go past the 18,500 mark but the benchmark indices also closed at a fresh 31-month high today. The Sensex logged in gains in the region of 350 points (up 1.9%) whereas Nifty managed gains of around 100 points over last Friday's closing. BSE Midcap and small cap indices also participated in the rally, ending higher by 1.3% and 1.8% respectively. More than six stocks gained for every one that closed lower on the Sensex today.

Equities worldwide seemed to be on a tear today as not only did other Asian indices close higher, Europe is also witnessing strong buying activity currently. The rupee closed at Rs 46.5 to the dollar at the time of writing.

While they may not have been leading contributors to the gains on Sensex today, metal behemoths Tata Steel and Hindalco did emerge as the top gainers on the index. However, the gains seemed to be more company specific than a consequence of the broader economic trends. As per reports, Tata Steel is looking to raise more than US$ 5 bn by way of loans as part of its debt recast plans at its UK subsidiary Corus. The re-financing it is believed will help company reduce its overall interest expenses. Plus, there are also reports that the company has sold one of the manufacturing units of Corus to a Thailand based producer. This move is also a long term positive for the company as unit in question did not have substantial cash flow to speak of and hence its sale would add to Tata Steel's net cash inflow. Hindalco, on the other hand, gained on account of the company's strong capex plans outlined in its recent AGM as well as expansion at its overseas subsidiary, Novelis. It should also be noted that the company expects Novelis to generage EBITDA to the tune of US$ 1 bn by year end from the current US$ 754 m.

Investors investing in IPOs are going to be spoilt for choice this September reports a leading business daily. As per the daily, as many as 11 small to medium companies are preparing to launch their IPOs this month. Some of these companies include Indosolar, Commercial Engineers, VA Tech Wabag, Ashoka Buildcon, Electrosteel, You Broadband and BS Transcom. Besides robust market conditions, another reason these companies are considering a September 2010 IPO is the fact that they will have to re-file the June quarter financial results with SEBI if the date of IPO is beyond September 2010. This does not mean that there will be very few IPOs post September. If the markets stay strong, IPOs will continue to come in thick and fast.