Sensex ricochets post SBI’s sturdy earnings; slide in Auto shares caps gains

Indian stock markets showcased a remarkable turnaround on the week’s last trading session as the frontline equity indices, after hitting the lowest point of day in late morning trades, took a turn for the better, trimming the session’s around two percent losses and eventually settling with a green tick.

After the gap down opening not many had hoped that Indian bourses would stage such a bounce back especially on a day when stock markets across the Asian region got thrashed with the South Korean and Japanese benchmarks being decimated by around three percent.

The cues from European markets too remained pathetic as they were grinded lower as trouble in the single currency region seemed to be aggravating every passing day as fresh worries emerged from Spain where global rating agency Moody's downgraded 16 leading banks’ credit rating. Moreover, the Indian rupee too failed to rise above the previous closing levels and hit fresh historical lows.

However, amidst all these dark clouds there emerged one silver lining - the surprisingly strong fourth quarter earnings announcement from State Bank of India, which almost singlehandedly dared to bring about a trend reversal. The banking bellwether’s upbeat result announcement spurred a fresh spell of buying wave since late morning trades and not only persuaded investors to open fresh positions in the banking sector shares but across the board.

The frontline equity indices went about cutting losses and cruised skywards to even touch the important psychological 16,200 (Sensex) and 4,900 (Nifty) levels before ending a tad lower. In the meantime, the rupee too did its bit by gaining some lost ground and reversing the losses it registered earlier in the day.

On the BSE sectoral space, buying was largely evident in the rate sensitive Bankex index, which surged close to two percent by SBI’s over five percent rally. The defensive FMCG pocket too gained traction and climbed over a percent thanks to heavyweight ITC’s close to two percent gains.

However, the Auto counter bore the maximum brunt of selling pressure in the session with close to two percent cut since the commercial vehicle major Tata Motors got pummeled by over four percent. Also, the losses in Capital Goods index too exerted some pressure on the bourses and capped the market’s upside chances.

On the global front, pessimistic cues from Asian markets remained the major sentiment dampener for the local markets. Investors’ morale got undermined as disconcerting reports from both sides of Atlantic prompted investors to flee from riskier asset classes like equities. Apart from lingering Euro-zone woes, sentiments were also pressured by a series of disappointing economic reports from the US where jobless claims held steady amid expectations of a decline, manufacturing in Philadelphia region surprisingly decelerated in May for the first time in eight months and US April leading economic index declined 0.1%. Moreover, the European markets too furthered its declining trend amid continued worries about the European sovereign debt crisis.

The NSE’s 50-share broadly followed index Nifty rose by about half a percent to settle below the psychological 4,900 support level while Bombay Stock Exchange’s Sensitive Index - Sensex gained close to a hundred points to finish above the crucial 16,150 mark.

Moreover, the broader markets underperforming their larger peers finished on a weak note, with cuts of around a quarter percent. The markets rose on good volumes while the market breadth remained pessimistic as there were 1,228 shares on the gaining side against 1,464 shares on the losing side while 122 shares remained unchanged.

Finally, the BSE Sensex gained 82.27 points or 0.51% to settle at 16,152.75, while the S&P CNX Nifty rose by 21.25 points or 0.44% to close at 4,891.45.

The BSE Sensex touched a high and a low of 16,206.35 and 15,809.71 respectively. The BSE Mid cap and Small cap indices were down by 0.27% and 0.24% respectively.

The major gainers on the Sensex were SBI up by 5.08%, Sterlite Industries up by 2.38%, ICICI Bank up by 2.26%, NTPC up by 2.22% and Gail India up by 2.12% while Tata Motors down by 4.06%, Maruti Suzuki down by 3.31%, Bajaj Auto down by 2.63%, BHEL down by 2.09% and Tata Steel down by 1.48% were the major losers on the index.

The top gainers on the BSE sectoral space were Bankex up by 1.75%, FMCG up 1.14%, PSU up by 0.79%, Oil & Gas up by 0.58% and Metal up by 0.40%, while Auto down by 1.90%, Capital Goods (CG) down by 0.53%, Realty down by 0.14%, TECk down by 0.11% and Consumer Durables (CD) down by 0.10% were top losers on the BSE sectoral space.

Meanwhile, retail inflation, as measured by the Consumer Price Index (CPI) has moved up to 10.36% in April 2012 as compared to 9.38% in March. Cost of living has also become more expensive for the urban consumer in April as compared to the rural, as inflation in urban areas surged by 11.10% versus 9.86% in rural (y-o-y).

The major jump in prices came from vegetables that became dearer by a whopping 24.55% in April 2012 as compared to the same month last year. Other commodities that showed a substantial increase were edible oils, which increased by 17.63% followed by milk and products which went up by 14.9% in April 2012, y-o-y basis.

Overall food inflation stood at 10.18% y-o-y. ‘Fuel and light’ as well as ‘clothing bedding and footwear’ also witnessed double digit inflation and increased by 11.4% and 11.95% respectively.

The rising inflation, both the CPI and WPI (7.32% in April), are expected to be a cause of concern for the Reserve Bank of India (RBI) which has been trying to control the spiraling inflation since the last fiscal. Food inflation, in particular has been stubbornly high making the task of rate cuts and hence growth, difficult.

The government of India has recently moved to the practice of reporting the CPI numbers as it feels that they are more representative of the inflationary pressures borne by the common man. However since the Index is still very new, it will be a while before the RBI starts using it as the basis for policy decisions.

The S&P CNX Nifty touched a high and low of 4,908.50 and 4,788.95 respectively.

The top gainers on the Nifty were SBI up by 5.82%, Sesa Goa up by 3.84%, Grasim up by 3.69%, IDFC up by 3.31% and SAIL up by 3.25%.

On the flipside, Tata Motors down by 3.87%, Ambuja Cement down by 3.52%, Maruti Suzuki down by 3.08%, Bajaj Auto down by 2.88%, and BHEL down by 2.35% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down by 0.11%, Britain’s FTSE 100 down 0.68%, while Germany's DAX was down by 0.12%.

Pressurized by eurozone turmoil and weak US data, all the Asian equity indices ended the day’s trade in the negative terrain on Friday. All the Asian counters butchered for second day in a row after Moody’s Investors Service cut the long-term debt and deposit ratings of the 16 Spanish banks, saying the government’s ability to support some banks had weakened while, feeble US data added to the pessimism. The nations’ conference board reported that the country’s leading economic indicators showed a decline of 0.1% in April after a gain of 0.3% in March. Also, the weekly claims for jobless benefits remained at same levels.

Meanwhile, Chinese shares fell over 1.4 percent to a one-month low on and Hong Kong shares suffered a third-straight loss on Friday, declining to a second weekly loss in a row as growing political instability in Europe pulled financial stocks down and underwhelming US economic data increased risk aversion. Moreover, Taiwan Weighted tumbled about three percent as market-men sold off Asian equities after further indication of rising instability among Spanish banks and political turmoil in Greece, but Ta Chong Bank surged on news it will be sold.

Stock market in Indonesia remained closed on Friday owing to a public holiday.