The Hindu Business Line : Banking, IT stocks lead market recovery

Markets shrugged off the heavy declines witnessed over the last few trading sessions and made a strong comeback on Tuesday. The Asian indices also closed higher after bearing the brunt of the global meltdown. The Sensex had lost over 7 per cent between February 27 and March 5 as part of a slump that eroded markets across the globe.

Banking, IT and select oil and gas stocks led the rally for the day. BSE FMCG and Metal indices, however, bucked the trend and closed with marginal declines. Among the various market cap segments, small-caps failed to make a recovery while BSE Midcap remained sedate. It appears that the rally was not broad-based as the advance decline ratio of stocks remained unfavourable. The declining stocks outnumbered the advances by a ratio of 1.2:1.

Buzzing stocks

While the mid- and small-cap indices remained weak, quite a few stocks in this segment made smart rallies. Binani Industries, D.S Kulkarni Developers, Jindal South West, Unitech and BF Utilities hit their upper circuit filters and closed at the same levels. IDFC, Reliance Communications, Gujarat Ambuja Cements and India Cements rallied on the back of huge surge in volumes. Ashok Leyland added 4.1 per cent to Rs 38.1 with high volumes. The company announced a 33 per cent increase in vehicle sales for the month of February.

Sector focus

IT stocks held the key for the day's market rally with the BSE IT index gaining as much as 4.9 per cent. Apart from heavyweights Infosys, Wipro and Satyam Computer Services, stocks such as Rolta, Mphasis and Patni Computer moved northwards.

Decline in metal prices at the London Metal Exchange pulled down domestic metal stocks. While Hindalco lost about 3 per cent, Tata Steel, Steel Authority of India and Sterlite also lost ground and closed in the negative.

Click here for table

Capital goods stocks made some comeback with select stocks ending higher. Praj Industries gained over 6 per cent to Rs 344.7. Bharat Electronics, Bharat Earth Movers, Dredging Corporation and Alban Offshore moved up sharply. Salon Energy added 2 per cent after the company bagged its maiden contract from the wind energy arm of Reliance Energy. Under the contract, Salon Energy would set up a wind farm of 150 MW wind turbine capacity in Maharashtra.

In the banking space, Punjab National Bank, Kotak Mahindra Bank, ICICI Bank and State Bank of India gained over 3 per cent while Bank of India, UTI Bank and Bank of Baroda were among the losers' list.

With the increase in dividend distribution tax announced in the Union Budget, a number of companies appear to be advancing their declaration of interim dividends. Shipping Corporation of India and MICO were among the companies, planning to declare an interim dividend. While the former gained over 3 per cent, MICO witnessed decline.

L&T added Rs 44 to Rs 1427.6 after Toshiba Corp, a Japanese maker of nuclear power generation machinery, said it was negotiating with Larsen & Toubro to jointly manufacture coal-fired power equipment.

Wire & Wireless, Glenmark Pharma, PTC India, Prajay Engineers Syndicate and Network 18 Fincap were some of the significant gainers at the NSE. PBA Infrastructure, SRF, Vimta Labs, Yes Bank and C&C Constructions were conspicuous losers.