The Hindu Business Line : Banking stocks in limelight

The markets opened on a weak note on expectations that the central bank would raise rates by a quarter basis points. However, it rebound strongly by the end of the day supported by a solid rally in banking stocks. The BSE Sensex closed 1.28 per cent up at 10,215.37 points.

Dramatic comeback

After a year-long lull, banking stocks made a dramatic comeback in the stock markets. Impressive set of numbers from the likes of ICICI Bank and Vijaya Bank had renewed confidence in the sector, the only one that did not participate in the earlier bull rally of 2006. The BSE Bankex returned a negative three per cent over the year as of last Friday. On Monday, the index was up 4.8 per cent. The RBI's decision to allow banks to raise funds overseas by selling perpetual bonds also helped bank shares rise today.

Earnings numbers of ICICI Bank beat street expectations. Similarly, Vijaya Bank rose 16 per cent on value buying after it reported good numbers.

State Bank of India gained on reports that the bank has sought the Finance Ministry's approval to sell additional stocks to existing shareholders on rights basis. Bank of Baroda, Bank of India, UTI Bank and Karnataka Bank gained more than 6 per cent for the day.

Tech stocks up

The depreciating rupee kept up the interest in frontline technology companies such as Infosys, Satyam, TCS and Wipro. TCS also won a $35-million order from Saudi Arabia. Among other technology stocks, MphasiS BFL gained close to 6.6 per cent.

Battery stocks energised

Battery stocks such as Exide, Amara Raja Batteries and Eveready are among those that rose sharply backed by good rise in volumes.

Good earnings numbers appear to have triggered interest in these stocks.

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Impressive earnings numbers from companies in the power equipment space have not lifted the spirit of stocks such as ABB and Kalpataru Power. BHEL received a Rs 2,000-crore order from NTPC. The stock moved up marginally to end at Rs 1,798.10 against the previous day's close of Rs 1,787.35.

Stock-specific action

Escorts was up as the company reported profits for the June quarter as against losses in the corresponding quarter previous year. For the June quarter, it reported profits of Rs 1.57 crore as against a loss of Rs 57.4 crore in the corresponding quarter last year.

Gail (India) was down on concerns that its projects in Iran could be affected by the political uncertainty in the region.

Natco Pharma gained after the company announced that it might consider buyback of shares.

Patel Engineering and Nagarjuna Constructions saw some action on the back of fresh order flows.

Patel Engineering said it won orders worth Rs 447 crore ($95 million) to build and operate a road and restore sewer lines.

Nagarjuna Constructions rose on news that it has won a Rs 720-crore order to build a road in Muscat, Oman.

Metal stocks showed weakness even as Hindustan Zinc zipped ahead with a 5.7 per cent gain. Hindalco, Nalco, Tata Steel and SAIL figured among the losers.