Post Market Commentary- 9-April-08

Sensex garners 203 points as bank stocks rally after Yes Bank results

Banking stocks surged in late trade after Yes Bank announced a forecast-beating profit and said it had no delinquent derivatives exposures. Fears that banks may take a hit in their balance sheet because of derivative losses have triggered a steep fall in banking shares over the past few weeks. Yes Bank results helped reduce the fear.

Concerns about corporate and bank earnings heightened after recent disclosures from ICICI Bank, India’s biggest private sector bank in terms of net profit and Larsen & Toubro, India’s biggest engineering & construction firm by revenue. On 4 March 2008, ICICI Bank said it had provided $70 million in Q3 December 2007 and may have to provide another $50 million in Q4 March 2008 for mark-to-market losses on investments. A few days later L&T said one of its subsidiaries L&T International FZE, may incur commodity-hedging-losses of as much as Rs 200 crore in the year ended March 2008.

The 30-share BSE Sensex jumped 202.89 points or 1.3% at 15,790.51.

S&P CNX Nifty was up 37.4 points or 0.79% at 4,747.05.

As per provisional figures on NSE, foreign institutional investors (FII) sold shares worth Rs 307.27 crore today, 9 April 2008 and domestic funds bought shares worth Rs 475.81 crore.

Power stocks rose. Realty and IT stocks declined. Capital goods stocks rose on reports Finance Minister P Chidambaram met representatives from auto and capital goods industries to discuss industrial slowdown after recent weak Index of Industrial Production (IIP) numbers.

HDFC Bank and HDFC were major gainers from Sensex pack. The market breadth was strong. Buying was witnessed in select mid-cap and small-cap stocks.

Asian and European stocks edged lower after Washington Mutual Inc, the largest US savings and loan firm, said on Tuesday, 8 April 2008, it expected a large quarterly loss and minutes from the Federal Reserve's latest meeting showed some of the central bankers saw the possibility of a prolonged and severe US economic downturn.