Banks, IT lead Sensex recovery

The key benchmark indices were flat in afternoon trade after paring early losses. The recovery was led by banking and IT stocks.
The BSE 30-share Sensex was up 44 points.
Weak global stocks had pulled the Sensex to a 4-four month low at the onset of the trading session.
A sustained selling by foreign funds amid the global financial sector crisis, a dire state of the global economy, slowdown in the domestic economy, weak rupee and uncertainty about the earnings outlook of India Inc continues to weigh on investor sentiment.
On the flip side, lower interest rate have helped automobile sales rebound in the past few months. The stimulus packages announced by the government since December 2008 has started having some positive impact.
Foreign institutional investors (FIIs) have pressed heavy sales this year. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 8519.30 crore (till 4 March 2009). Globally, investors are pulling out money from hedge funds, forcing hedge fund managers to dump assets.
At the same time, global banks and insurers are selling assets after amassing $1.2 trillion of credit losses and writedowns since the start of 2007. More recently, fears have intensified about the exposure of Western European banks and companies to deteriorating economic conditions in Eastern Europe.
Domestic institutional investors (DIIs) have been absorbing selling by foreign funds.
Asian stocks slipped on Friday led by financial stocks following overnight steep slide in US stocks. Caution also prevail ahead of what is likely to be a dismal US non-farm pay report for February 2009 later in the day. Key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore were down by between 0.31% to 3.38%. Taiwan's Weighted index rose 0.35%.
US stock indexes Thursday fell to their lowest levels in more than 12 years, with notable declines in Citigroup (it dipped below $1 for the first time ever) and General Motors.
The global credit crisis sparked by a US housing slump has caused almost $1.2 trillion of losses at financial institutions worldwide. Mortgage delinquencies in the US climbed to the highest level on record, the Mortgage Bankers Association said on Thursday, 5 March 2009. More than 6,00,000 Americans filed claims for jobless benefits for the fifth-straight week, the worst performance since 1982, Labor Department figures showed on Thursday.
At 11:26 IST, the BSE 30-share Sensex was up 44.39 points, or 0.54%, to 8,240. At the day's low of 8,047.17, the Sensex lost 150.75 points in early trade its lowest since 27 October 2008. At the day's high of 8,244.51 Sensex rose 49 points in mid-morning trade.
The S&P CNX Nifty was up 7.45 points, or 0.29%, to 2,584.15. It hit a low of 2,539.45, its lowest since 20 November 2008.
The market breadth, indicating the overall health of the market, was weak on BSE with 724 shares advancing as compared with 1,271 that declined. A total of 79 shares remained unchanged.
From the 30 share Sensex pack, 18 stocks rose while rest fell. ITC, Tata Power Company, Hindustan Unilever, ACC fell by between 1.25% to 3.04%.
India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.37% to Rs 1145. Nevertheless, the stock came off the day's low of Rs 1,118.05 on bargain hunting after a recent steep slide. The combined crude processing at its two export-focused plants at Jamnagar in Gujarat dived 12.1% to 6,68,450 barrels per day (bpd) in January 2009 over January 2008, data during trading hours on Thursday showed. Reliance commissioned its new 5,80,000 bpd plant in December 2008, turning Jamnagar into the world's biggest refining complex with capacity of 1.24 million bpd.
The board of Reliance Industries on Monday, 2 March 2009, approved the absorption of its unit Reliance Petroleum (RPL) and set a share swap ratio giving it direct control of the world's largest refinery complex. Reliance Industries said it would issue one share for every 16 held in RPL, which runs a refinery.
Banking stocks reversed losses as hopes a further fall in interest rates may boost lending growth offset fears of rising defaults in a weakening economy and fall in American Depository Receipts (ADRs). India's largest private sector bank by net profit ICICI Bank rose 3.6% to Rs 279.30 off the day's low of Rs 252.75. Its American Depository Receipts (ADR) fell 12.26% on Thursday, 5 March 2009.
India's second largest private sector bank by operating income HDFC Bank gained 1.5% to Rs 812.70 off the day's low of Rs 774. Its ADR fell 7.67% overnight.
India's largest bank in terms of assets and branch network State Bank of India rose 1.44% to Rs 947.90 off the day's low of Rs 911. The bank has reduced deposit rates by 40 to 50 basis points across maturities. The new rates would be effective from 9 March 2009.
Despite a steep cut in policy rates by Reserve Bank of India (RBI) since October 2008, there has not been a commensurate reduction in lending rates by banks as fears of rising bad loans have made them cautious in increasing advances/lending. One reason why banks have not fully passed on the central bank rate cuts to customers is because higher bond yields are pushing up their funding costs. Bond yields and bond prices are inversely related.
Bond yields were little changed in thin trade on Friday with sentiment cautious ahead of the Rs 12000-crore debt auction due later in the day. The market sentiment was hurt after the central bank set a lower cut-off price of Rs 107.60 at the buyback auction of the 7.99% government bonds maturing in 2017, below market expectations of Rs 107.80, late on Thursday.
Between 19 December 2008 and 13 February 2009, commercial banks lent only Rs 8091 crore to firms, one-tenth of the Rs 86978 crore lent in the same period a year earlier, as per the latest RBI data.
Outsourcing focussed IT firms extended gain on a recent steep slide in the rupee. India's third largest software services exporter, Wipro rose 1.53% even as its ADR fell 3.36% on Thursday. India's largest software services exporter by sales TCS rose 1.34%. India's second largest software services exporter Infosys Technologies rose 1.33% even as its ADR fell 4.73% overnight. India's fifth largest IT major by sales HCL Technologies rose 0.32%.
Satyam Computer Services surged 15.67% after company received approval from Securities and Exchange Board of India to kickstart a process to sell a 51% stake, in a move likely to attract more bidders. Satyam said it expects to soon invite expressions of interest from qualified investors, with more than $150 million in net assets, under a global bidding process.