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Friday, July 19, 2013

Terrific Thursday! Nifty re-conquers 6000 mark

Better-than-expected quarterly earnings led by Axis Bank swung the mood from terrible Tuesday to terrific Thursday. The week has been intensely volatile on varied cues both domestic and international. Dealers expect volatility to perk up on Friday given the weekly close and results by index major Reliance Industries.

The markets opened with a positive gap and continued to trade in a tight range for most part of the day. It spurted up post 2:30 PM before slight profit-booking saw it close below the day's high.

Axis Bank was the star in trade today after it posted a 22.5% rise in Q1 FY14 net profit. India's third largest private bank delivered a lower-than-expected increase in non-performing loans at 0.35% of total assets versus 0.31% in the same period last year.

Peer Kotak Mahindra Bank reported result which were inline with market expectations. However, it disappointed on the non-performing asset front. Gross NPAs rose 1.95% from 1.6% year-on-year. Net NPAs stood at 0.98% as against 0.8% YoY.

Commenting on how banks have performed in the current earning season, Amar Ambani, Head of Research at IIFL, said private sector banking results have been a mixed bag so far. "While HDFC Bank and Kotak Mahindra Bank exhibited some stress in asset quality, Axis Bank reported stable non-performing loans." Given the attractive valuation, Axis Bank remains his top pick among banking stocks.

So great was the positive sentiment that not a single sector on the Bombay Stock Exchange ended in the red. Realty, banking, consumer durables, capital goods, oil and gas and power stocks were the top gainers. The broader market -- mid and small-cap stocks -- witnessed some buying.

On the global front, Federal Reserve Chairman Ben Bernanke kept up with his guessing game on when the massive $85bn monthly bond buying program will be tapered. In his address to the US House of Representatives Financial Services Committee, Bernanke said the Fed expects to start scaling back its massive asset purchase program later this year. This was the prime reason for the rangebound market pre-lunch.

The Sensex surged 180 points to close at 20,128 while the Nifty shut shop 1% higher at 6, 038.

The advance-decline ratio marginally favoured the bulls. On the BSE, 1,204 stocks advanced against 1,113 declines, while 169 stocks remained unchanged.

Volatility plunged 5% with India VIX ending at 18.27 after hitting a day’s high of 19.40 and low of 18.07.

Stocks in News:

Reliance Infrastructure, ONGC, Asian Paints, Axis Bank, Bank of Baroda, BHEL, Hero MotoCorp, DLF and Cairn led the gainers pack while HCL Technologies, M&M, TCS, UltraTech Cement, NTPC, Sesa Goa and Bajaj Auto lost out.

IDBI Bank scrip was up 2% at Rs. 70.5 per share despite a 28.1% decline in Q1 FY14 net profit at Rs. 3.07bn.

Reliance Communications gained over 2.5% to close at Rs. 147 after the company launched a new 3G data offer at 2G data prices.

Reliance Industries closed marginally up at Rs. 916.30 ahead of its results on Friday. Prayesh Jain, Associate Vice-President - Oil & Gas at IIFL, sees Reliance Industries posting a net sales of Rs. 958.82bn, a gain of 4.4% year-on-year. On the operating profit margin front, Jain sees a 21 bps YoY rise at 7.6%. He forecasts a 17.7% YoY growth in net profit at Rs. 52.64bn.