The Hindu Business Line : Relief rally in banking stocks marks day of credit policy

With the Reserve Bank of India deciding to hold rates in its much-awaited credit policy, the markets breathed a sigh of relief on Tuesday and banking stocks were among the major gainers.

The benchmark BSE Sensex gained 208 points to close at 14,136. The Nifty gained nearly 1.5 per cent to close at 4,141.

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Among the sector indices, Bankex was the strongest gainer with four per cent increase, while the auto and commodity stocks also posted gains.

However, market breadth remained neutral, with the advance-decline ratio remaining at 1:1. Mid-cap and small cap stocks trailed large-caps, with gains of 0.75 per cent and 0.47 per cent respectively in these indices.

Index movers

Key stocks that contributed to index gains were Bharti Airtel, Reliance and ICICI Bank, while the laggards were tech majors such as Infosys, TCS and Wipro, apart from BHEL.

Heavyweight stocks such as HLL, HDFC and Siemens also ended the day in positive territory.

Sector-specific moves

Rate-sensitive sectors such as banking, real estate and auto stocks were market favourites followed by metals and oil & gas.

The annual credit policy announcement, which left the interest rates untouched, helped build positive sentiment towards banking stocks. The major gainers in the sector were SBI, Canara Bank, Oriental Bank of Commerce, Bank of India and PNB.

Real estate stocks surged after the RBI announced that it may review the risk-weight attached to home loans. Stocks such as Parsvnath Developers, Unitech and Indiabulls Real Estate saw huge volumes being traded.

Auto stocks, recently battered by interest rate concerns, recovered. In the space, Tata Motors advanced by 3.5 per cent while M&M, Bajaj Auto and Hero Honda followed by clocking gains of 1.5 per cent.

Maharashtra Seamless, Jindal Steel, Tata Steel, Sterlite Industries, Hindustan Zinc, Reliance Petroleum and ONGC were the stocks that ended in the green in the metal and oil & gas segments.

Mid-cap moves

MTNL, Advanta India, Gabriel India, Oswal Chemicals and LML were some of the stocks that closed in the negative. Construction stocks emerged the clear winners in the BSE Midcap Index, with Nagarjuna Construction, Hindustan Construction, IVCRL and Mahindra Gesco gaining more than seven per cent during the day. Ansal Infrastructure was another construction stock that hit the upper circuit limit.

Stock-specific action

Iron ore exporter Sesa Goa lost Rs 43 after Vedanta Corp acquired 51 per cent stake in it, ending weeks of speculation. Vedanta has offered to buy further 20 per cent in the company from public shareholders at the same price.

Better-than-expected fourth quarter profits due to strong volume growth saw Maruti Udyog rise to close with a gain of 3.52 per cent.

Shares of Hinduja TMT, a cable television operator and broadband distributor, headed southward after the company hived off its IT business.

Amid concerns of fall in domestic sugar prices and excess supply in the market, Bajaj Hindusthan announced second-quarter profit of Rs 3.67 crore. The stock gained 0.4 per cent to close at Rs 164.45 on the NSE.

The Parsvnath Developers stock ended on a positive note after the company announced that it would develop a metro station-cum-mall at the Commonwealth Games Village.