Sensex recovers on strong SBI Q1 nos

Today’s major news:

State Bank of India hits 52-week high on robust Q1 results; the stock closes 6.93% higher

Index of industrial production for June at 7.1%

Tata Power Q1 consolidated net profit slides 46% yoy; the stock closes 0.42% lower



Global signals

The European markets were trading flat on Thursday (August 12, 2010), as banking shares fell on concerns over the pace of the global economic recovery.

All the major Asian indices shut in the negative territory. Shanghai Composite slid over 1%.

The US stock index futures pointed to a mixed opening on the Wall Street on Thursday. Investor may focus on the weekly jobless claim, while the companies scheduled to report quarterly results include Nividea Corp and Sara Lee.

Indian indices

The domestic market ended the volatile session on a flat note after trading weak all through the day owing to the pessimistic global cues. The outstanding performance by the India’s biggest public sector bank, State Bank of India (SBI), post better-than-expected quarterly numbers supported the markets to recover sharply in the last hours of trade. Partial recovery in the Asian indices also helped the domestic bourses to recover early losses. The gains in other heavyweights like Oil & Natural Gas Corporation and Hindustan Unilever also provided some relief. However, Reliance Industries continued its downward journey in today’s session.

The market ignored the lower index of industrial production (IIP) numbers for June, which came in at 7.1% versus 11.5% seen in the previous month. The food inflation for the week ended July 31, 2010 rose to 11.4% from 9.53% seen in the previous week.

The Sensex started the day on a feeble note at 17973, 102 points lower tracking unhealthy global cues. The Sensex slid further and hit the day’s low of 17915 in its initial trade. The index partially recovered its early losses in the morning trades. In the afternoon session, the index erased all its losses and turned positive to hit the day’s high of 18114 after the SBI posted strong Q1 results. However, from that level the Sensex fell again and traded lower. Finally, in the late trade, the Sensex once again erased all its losses to end the session on a flat note on the back of buying in banking and auto stocks.

At the finishing line, the Sensex closed at 18074, mere four points higher. The Nifty shut at 5416, mere four points lower.

Bond Market Wrap Up: India's 10-year bond yields were at 7.79% versus 7.81% yesterday. The bonds gain in anticipation that the Reserve Bank of India may pause rates hike on weaker global recovery.

Market Outlook: We need to look for Tata Steel numbers, with a profit expectation of Rs1,350 crore for the first quarter of FY11. The focus will also be on the jobless claim data in the US.

Market sentiment

The market breadth was unconstructive as declining stocks outdid the advancing ones. Of the 3,045 scrips traded on the BSE, 1,640 shares fell whereas 1,293 shares rose. Hundred and twelve shares traded unchanged.

Sectoral & stock screening

Banking and auto sectors witnessed some investor interest, with the BSE Bankex and the BSE Auto up by 1.68% and 1.17% respectively. Information technology (IT) sectors were under pressure, with BSE IT down by 0.90%, followed by BSE Metal that declined by 0.77%.

Among 'A' group stocks, star stock of the day was SBI that advanced by 6.93% after posting robust Q1 results, which were above market expectation, followed by Bank of India that surged by 5.92% and Religare Enterprises that rose by 5.21%. Top losers' were - Educomp Solutions slid the most by 6.19%, followed by Sesa Goa that fell by 4.86% and MMTC that shed 4.68%.

Viewing volumes

India's second largest developer - Unitech was the most traded share with over 0.77 crore shares changing hands on the BSE, followed by industrial finance company - IFCI (0.72 crore shares), fast moving consumer goods firm- Marico (0.36 crore shares), steel major - Tata Steel (0.35 crore shares) and wind turbine major - Suzlon Energy (0.25 crore shares).