Indian markets had their best day of 2010, with leading indices jumping over 2%. This was due to two factors: global markets are on a roll in September, and Indian IIP data released on Friday had showed a strong 13% growth. Today, several Asian markets rose 2% as well, and London was trading around 1% up.
The Sensex rose 408 points to close at 19208.33, up 2.2%. The Nifty closed at 5760, up 2.13%. Both indices closed near the day’s highs. While indices posted strong gains, the underlying strength was mixed. Only about 50% of traded scrips gained, suggesting a lot of profit booking is going on. The top sectoral indices were banks (+3.5%) and realty (+2.5%).
Leading Nifty gainers was banks: SBI (+5.8%), HDFC, the mortgage company (+5.6%), ICICI Bank (+4.3%) and Axis Bank (+3.1%). Among other stocks, Hindalco (GM:HNDNF) was up 4.6%.
Several PSU banks, not in Nifty, gained as well, namely Andhra Bank (+4.5%), Central Bank (+4.2%), Union Bank (+4%). We advise investors to exit bank stocks now. The smaller PSU bank stocks need not trade at significant premium to book value.
We have said earlier we expect airline stocks to outperform. We have Buy ratings on Jet and Spice. Jet was up 5.1%.
In the IT sector, HCL Infosystems was the top gainer, up 5.1% to close at Rs 131.65. We had reiterated out Buy rating on the stock this weekend.
Disclosure: No positions