Financials contribute 50% of over 2,000 point Sensex rally in eight days
HDFC, ICICI Bank, HDFC Bank, Axis Bank and SBI have collectively contributed 1,201 points of 2,224 points Sensex rally.
January 27, 2015 Last Updated at 17:20 IST
Financial stocks have contributed more than half of the benchmark index, the S&P BSE Sensex, over 2,000 points rally in past eight trading sessions. Five stocks – Housing Development Finance Corporation (HDFC), ICICI Bank, HDFCBank, Axis Bank and State Bank of India (SBI) – have collectively contributed 1,201 points rise in benchmark index since January 15, data suggests.
The S&P BSE Sensex that closed to 29,571 on Tuesday has rallied 2,224 points or 8.13% in past eight trading sessions from 27,347 on January 14. The benchmark index scale new high of 29,619 during intra-day on Tuesday.
Between January 15 and January 23, in seven trading days,FIIs have pumped in Rs 9,226 crore in the equity markets. The total investor wealth increased by Rs 5.33 lakh crore during the period. Measured in terms of total market capitalisation of all listed companies on the BSE, the overall investor wealth in the Indian stock market rose to Rs 104.11 lakh crore on Tuesday as compared to Rs 98.78 lakh crore as on January 14, 2015.
“Private sector banks have been steady financial performers. As a result, investors have been preferring the private sector banks to their public sector counterparts. Secondly, the rate cut that got announced recently is still having a positive impact on these stocks. Thirdly, most of these banks have subsidiaries in the form of insurance companies and broking arms. There is a possibility that there is some value unlocking in case they get FDI (foreign direct investment) in insurance. This is one trigger waiting to happen in some of these companies,” said K Subramanyam, assistant vice-president (institutional research), Asit C. Mehta Securities.
HDFC twins shine
HDFC, the country's largest mortgage financier company, the largest contributor among 30 share index, have contributed 363 points in total index gain. ICICI Bank has contributed 320 points, followed by HDFC Bank (247 points), Axis Bank (181 points) and SBI (91 points).
Larsen and Toubro (217 points), Tata Motors (179 points) and Reliance Industries (106 points) are from non-financials contributed more than 100 points each in Sensex rally. Sun Pharmaceutical Industries, Bharti Airtel and ITC have contributed between 75-90 points during the period.
Since January 15, the market price of HDFC, ICICI Bank, HDFC Bank, Axis Bank and SBI market price have appreciated between 8-18% after the Reserve Bank of India (RBI) Governor Raghuram Rajan unexpectedly cut the benchmark repurchase rate by 25 basis points to 7.75% from 8%.
Axis Bank, which recently announced its December quarter results impressed the Street on most parameters. As against analysts' expectations of around Rs 1,100 crore additional restructured assets, the bank added a mere Rs 132 crore due to reduced stress in the mid-corporate segment, a pressure point for some time, reports suggest.
“Axis Bank’s pre-provisions profitability continues to be one of the strongest among banks. Further, falling bond yields will continue to provide additional tailwind to earnings. Capital remains comfortable to take advantage of growth opportunities. Maintain outperform rating,” Ashish Gupta, Prashant Kumar and Kush Shah of Credit Suisse said in a post results note.
In the short – term, analysts say, banking stocks may appear stretched but a deep correction in them doesn’t look likely.
“I think most of these stocks will be bought into till the Budget in February and there could be a possible correction post that. I suggest partial profit booking in these counters,” Subramanyam adds.
http://www.business-standard.com/article/markets/financials-contributes-50-of-over-2-000-points-sensex-rally-in-eight-days-115012700789_1.html
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