Nifty recovers to end flat post SBI nos, shrugs IIP data

12 Aug 2010

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Equity benchmarks ended the session on a flat note, after witnessing a tussle between the bulls and the bears. The Nifty opened the day with downward tragectory on weak global cues and stayed down in the first half of trade. Markets were further put under pressure by disappointing IIP data. However, State Bank of India's stellar numbers for Q1FY11 provided impetus to the index, which managed to recovery most of its losses in the last hours of trade.

The Nifty has still been in a range of 5350-5500 for the fifth consecutive week though there were some bouts of profit booking or rally. Experts believe the markets will stay in a rangebound trade. Rajat Rajgarhia of Motilal Oswal Securities says the Nifty is likely to remain in the 5,000-5,500 range. ''Given the global headwinds, there is a reasonable chance that we may remain sideways or go down 5-6% from here. We have been rangebound since the past 12 months and the trend seems to be continuing for another one quarter or so,'' he reasons.

It was a mind-blowing performance reported by India's largest bank - State Bank of India (SBI) in its quarterly results. It has reported a net profit of Rs 2,914 crore in Q1FY11, a growth of 25.04% on year-on-year basis, boosted by lower NPAs. Net interest income jumped 45.36% to Rs 7,304 crore. Numbers were better-than-expected, as CNBC-TV18 expected net profit at Rs 2,450 crore and NII at Rs 6,646.3 crore. Net non-performing assets (NPAs) improved to 1.7% versus 1.55%.

SBI shot up 7.1% to Rs 2,784 per share on NSE; it was the top traded as well as biggest gainer on Nifty. Its trading volumes jumped 700% to 2,337,861 shares, compared to its 5-day average of 291,101. Technical Analyst, Ashwani Gujral said it has opened up room all the way to about Rs 3100 as it broke Rs 2500 level. Among other financial stocks, Axis Bank and PNB gained 2-2.9% while ICICI Bank, HDFC Bank, Kotak Mahindra Bank and HDFC declined 0.4-0.9%.

On the other side, Industrial production for the month of June grew 7.1% as against 11.3% in May 2010. Numbers were weak but experts' opinions were mixed. Sachchidanand Shukla, Senior VP and Economist, Institutional Equity Research, Enam Securities Pvt Ltd said, "The base has not changed at all. The fact is that with an unchanged base, we have come from 11.5% to 7.2%, which is a 430 bps drop, which tell us how strong this base impact was."

"I wouldn't be terribly disappointed because if you look at the numbers; one, there is seasonality, second, you have the base impact. If you look at all these lead indicators coming across from the West as well as China, the purchasing managers index (PMIs), everything has been disappointing. Viewed in context of these three factors, I think moderation was in order. This should not be seen as a huge drop in output in India or demand slowing down dramatically. So, I am not disappointed."

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