Market Report: Footsie within reach of record as analysts turn bullish again

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The Independent Online
Blue chips again nudged their best-ever levels, helped along by a series of analyst meetings and Footsie optimism from NatWest Securities.

The index closed at 5,077.2 points, up 49.7. It is the second time in three days it has moved to within hailing distance of the 5,086.8 closing peak, hit six weeks ago.

NatWest's Bob Semple can claim to have been the most bullish market strategist at the start of the year when he forecast Footsie would hit 4,600. At the time it was at a then peak of 4,118.5.

In the event he was too cautious, with Footsie achieving his target long before he had expected.

Now he has moved his 12-month estimate from 5,200 to 5,600. He is, however, nervous about the performance in the next few months and has settled for a year-end forecast of 4,800.

A number of influences have prompted the new Semple bullishness. He has latched onto a forecast fall in gilt yields; indications that the economy is not overheating; the shortage of new issues; and the absence of the much-feared deluge of profit downgradings in the current results season.

The better-than-expected trading, which has become increasingly evident as the season has unfolded, has been further underlined by the response to meetings between companies near to drawing up their half-year figures and analysts.

Once it completes its current trading period - six months or a year - a company usually goes into purdah until it declares its results.

Among those which have met or are meeting analysts are Granada, up 18p at 864.5p, Northern Foods (6.5p to 237p); Hazlewood Foods (6.5p to 144p) and Imperial Chemical Industries (5p to 988.5p).

Carlton Communications met fund managers at Henderson Crosthwaite on Tuesday and Booker, the cash and carry group that recently produced half- year figures, is meeting analysts today and tomorrow. Unigate is another on the analytical treadmill.

A solid New York opening, firm Gilts and even the $9bn Salomon Brothers/Travelers merger were other factors behind the latest exuberance which also gently embraced second- and third-liners.

Pubs chain Greenalls, another talking to analysts, missed the fun, falling 37.5p to 414p. And Biocompatibles International remained in the dumps, off a further 17.5p to 457.5p.

HSBC led blue chips with a 68.5p gain to 2,007p; Railtrack, enjoying speculation about possible benefits from any privatisation of the London Underground, moved ahead 23.5p to 890.5p and Boots added 24p to 863.5p on director buying.

Shell was again the most heavily traded share with Seaq putting volume at 57 million. Derivative action was behind the activity.

Rank rose 8.5p to 353.5p as Henderson said buy and British Petroleum enjoyed buy advice from BZW, gaining 15.5p to 911.5p.

Royal Bank of Scotland hardened 12.5p to 651.5p as stories of a bid from 9.9 per cent shareholder Banco Santander of Spain resurfaced.

National Grid fell 4p to 282.5p after confirming the Energis flotation and BSkyB was ruffled by competition worries, losing 11.5p to 470.5p. Brent International, the chemical group, rose 6.5p to 86p (after 93.5p) in busy trading and NFC, the transport group, advanced 10.5p to 151.5p on talk of a share buy-back.

Meconic, a chemical group, produced the day's profit warning, retreating 32.5p to 315p. The shares have fallen from 422.5p since the spring.

There was talk of corporate action on the forecourt with suggestions a garage group was indulging in a cash-raising exercise. One suggestion was Sanderson Bramall, up 7.5p at 225p, was planning to renew its interest in struggling Appleyard, the country's fifth-largest dealer.

Another takeover approach to the JLT food group lifted the shares 10.5p to 55.5p and watch maker Dailywin ticked 10p better to 112.5p on its Hong Kong listing.

The growing diplomatic crisis over the sentences on the two British nurses hit groups with strong links with Saudi Arabia. British Aerospace, for example, fell 23p to 1,627.5p.

Taking Stock

More, the outdoor advertising group reporting interim figures today, is planning to transmit posters into bus shelters. It intends to fit flat television screens in shelters so it can project static displays which could be changed a number of times each day. Interim profits are likely to be around pounds 8m (pounds 6.2m). The shares were little changed 677p.

SIG, the acquisitive insulation group, was actively traded with a series of mixed deals going through. The price firmed 4p to 312.5p. It has just completed the pounds 25.9m takeover of Roskil; further corporate action is rumoured.

Emerald Energy raised nearly pounds 3m through a 5p share placing by stockbroker WH Ireland. The cash is needed for its Colombian and US drilling programmes. The shares held at 5.25p.