BSE Sensex gains on SBI earnings, bucks Asian falls

By Manoj Dharra

MUMBAI (Reuters) – The BSE Sensex recovered from its lowest intraday level since January 9 to gain on Friday after stronger-than-expected earnings from State Bank of India relieved concerns about non-performing assets and credit growth in the lending sector.

The earnings from India‘s biggest bank offset a day of continued global risk aversion that pummelled Asian shares, but were not enough to prevent the BSE index from posting its fourth consecutive weekly loss.

Analysts said the gains on Friday would prove temporary, and that concerns about global markets, as well as about India’s economic and fiscal challenges would soon dominate trade.

Slowing policy reforms from the government have also been a key concern for investors, and have contributed to send the rupee to its third consecutive daily record low against the dollar on Friday.

“Changes on policy front are required and I don’t expect that to happen … and therefore markets may go to December lows because of deteriorating macro conditions” said Sandeep Bharadwaj, head India Equities at brokerage Derivium Tradition.

The 30-share BSE index gained 0.5 percent to 16,152.75 points, after earlier falling as much as 1.6 percent to four-month lows, and not far levels in December when Indian markets were also hit hard by global as well as domestic factors. The Sensex fell 0.86 percent for the week.

The 50-share Nifty added 0.44 percent to end at 4891.45 points on Friday.

SBI rose 5 percent and was among the day’s big gainers after it reported net profit surged to 40.50 billion rupees for the January-March quarter from a small profit a year earlier.

Analysts were particularly heartened after SBI set aside 28.4 billion rupees for bad loans in the March quarter, nearly 13 percent less than in the same period a year earlier.

SBI’s gains pushed up other banks, with ICICI Bank, the country’s biggest private lender, rose 2.3 percent.

Shares of airlines surged as the steep falls in crude oil prices helped offset worries that a dropping rupee would raise the cost of fuel imports.

Jet Airways (JET.NS) rose 6.3 percent while Spicejet (SPJT.BO) ended 8.7 percent higher.

Mahindra Satyam gained 5.7 percent after reporting swinging to a better-than-expected profit of 5.34 billion rupees in Jan-March from a loss of 3.27 billion rupees in the same period last year.

But some blue chips extended a rout, with shares in Tata Motors down 4.15 percent, on continued worries about global sales after it reported flat growth in April, shedding 12.64 percent for the week.

India’s auto shares are the biggest losers this week with the auto index down 5.6 percent, as a record low rupee is seen raising the cost of imports, royalty payments.

Maruti Suzuki fell 3.2 percent.

Power equipment maker Bharat Heavy Electricals(BHEL.NS) fell 2.6 percent, having hit on Friday its lowest since October 2008, while non-ferrous metals producer Hindalco Industries lost 0.8 percent, having earlier hit its lowest since September 2009.