The Hindu Business Line : Robust Q1 numbers help Sensex to end positive

The flurry of earnings numbers continued to dictate stock specific action in the markets. This week started off on a good note for small cap stocks. After a brief rally in mid cap stocks last week, it was the turn of small cap stocks to do catch up. The BSE Small Cap index rose 1.31 per cent as against other broad based indices that gained less than a percentage point. The advance to decline ratio at 2 to 1 too suggested higher optimism in small cap stocks as against other broad based indices. Banking stocks too continued their upward trend, buoyed by impressive results from a set of banks.

Earnings impact

A number of stocks such as Unitech, Suzlon, Aditya Birla Nuvo, BHEL and Reliance Communications declared good set of earnings numbers for the first quarter of FY07. Enthused by earnings numbers, these stocks attracted buying interest. Several funds have accumulated Aditya Birla Nuvo over the past few weeks. BHEL climbed four per cent after being range bound for a prolonged period even when other large cap stocks marched ahead. An 83 per cent rise in profits for the first quarter appears to have bought back investors to the stock. After a fall in profits in the previous quarter, a three-fold rise in profits in the June quarter appears to have enthused interest in the stock of Suzlon.

HLL, Jet Airways, and Gujarat NRE Coke were among those that were shunned due to lower than expected earnings numbers. The stock of HLL dipped over four per cent even as it reported 35 per cent growth in earnings. Jet Airways said that it may have to write off advances it paid to Sahara Airlines after the plan to buy the airline failed. It also reported a wider than expected loss due to rising fuel costs. Gujarat NRE Coke too reported a 43 per cent drop in profits. The company had been riding on rising coke prices for the last couple of years. Profits suffered as coke prices tapered off from a high base.

Bank stocks zip ahead

Bank stocks continued to attract attention as worries about interest rate hikes appear to have more or less been factored into valuations. Positive feelers such as a strong credit growth, expectation of rural credit picking up and easing of norms for raising capital appear to have reposed faith in this so far neglected sector. Andhra Bank, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank, Union Bank and Vijaya Bank figure among the top gainers.

Buzzing stocks

Monsanto, ABG Shipyard, Container Corporation, Cosmo Films, Havell's, Samsung Pistons, Viceroy Hotels and Madhucon Projects were few stocks that zipped ahead. These stocks gained in excess of five per cent for the day.

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Orders have been piling up for ABG shipyard and Havell's earnings numbers and future plans could have triggered interest in the stock.

Event specific action

Hindustan Motors gained close to 17 per cent on reports that it may move into the small car segment.

Natco Pharma gained only marginally even after it announced a buyback of shares at Rs 150 each. The stock now trades at Rs 97.

Hero Honda gained a percentage point after it said it would raise prices of motorcycles by between 1.5 per cent and three per cent.