Sensex touches 7700 despite the weakness in ONGC

The markets opened the day with a large negative gap as ONGC nosedived in opening trades as expected. For those traders who mistook this weakness as the much awaited correction in markets, what happened later in the day would have been a rude shock.

The indices recovered from the lows without losing much time as most other frontline stocks surged ahead. They kept climbing as the last remaining short positions were covered on the last day of derivatives settlement. Strength in bank stocks, Reliance and Infosys took the Sensex to 7700 for the first time ever.

Banks continued their dizzy rise which started ever since the RBI left short term interest rates unchanged. ICICI Bank surged close to 5 per cent during intra day trades. Strength was seen in SBI and a host of other large banking stocks as well.

Just when it appeared that the Sensex would be able to close above 7700, selling emerged and pulled down the indices and the Nifty went into the red. The Sensex however managed to stay in the positive as ONGC has a much lower weight on the Sensex.
Sensex closed at 7635, a gain of 30 points and the Nifty at 2312, a loss of 6 points. Nifty August futures closed the day at a discount of 16 points to the spot index.

M&M, Bharti and Dr.Reddy's were among the major gainers among Nifty stocks while SAIL, Ranbaxy and Dabur were the major losers.

SBI reported a 15 per cent rise in first quarter profits on an income growth of close to 17 per cent as compared to the same quarter of previous year. Net interest income was higher by close to 20 per cent helped by a more than 30 per cent growth in advances.

SBI's bottomline was supported by close to Rs800 crore of one-time receipts, of which over Rs700 crore was on account of interest on income tax refunds. These receipts helped the bank to post a profit growth despite a huge provision of over Rs1,000 crore for depreciation in investments.

The bank is planning to expand its overseas operations aggressively and is looking at possible acquisitions as well. The stock closed with gains of over 3 per cent.

Tata Motors surprised the markets by reporting a 22 per cent increase in profits for the quarter on a revenue growth of over 8 per cent. Most analysts were expecting a decline in profits as compared to the same quarter of previous year.

Tata Motors was helped by an improvement in operating margins aided by improved price realisations. Exports for the quarter almost doubled and contributed 17 per cent of the revenues. The company announced that Ravi Kant, executive director of the commercial vehicles division, would take over as the managing director of the company. The stock surged close to 2 per cent before closing flat.

ITC Limited reported a better than expected performance in the first quarter. Profits for the quarter were higher by 20 per cent on a revenue growth of 25 per cent as compared to previous year. Higher cigarette prices and improved performance of the packaged foods division helped ITC during the quarter. The company has recently launched a range of personal care products as well. The stock closed lower.