Bank shares in the limelight

STOCK REPORT

Key indices, which were around 1 per cent up for most of the session on Tuesday, ended 2 per cent up on build-up of fresh positions and short covering in the closing hour.

Some dealers said the market has discounted a probable 25 basis points hike in key interest rates by US Federal Reserve at its meet later on Tuesday.

The Bombay Stock Exchange Sensex closed 11014.97, up 202.33 points or 1.9 per cent. It closed above 11000, a key resistance level according to chartists, for the first time since May 18. Intraday, it moved between 10839.53 and 11028.02.

The National Stock Exchange Nifty closed 3212.40, up 61.30 points or 1.9 per cent. It closed above 3200 for the first time since May 29. Intraday, it moved between 3151.55 and 3216.75.

Also, advances in heavyweights Reliance Industries, up 2.3 per cent, and Oil and Natural Gas Corp, up 2.5 per cent, helped indices retain gains throughout the session.

However, turnover on NSE and BSE combined was Rs 6200 crore, up marginally from Monday.

Midcap indices CNX Midcap and S&P CNX 500 ended up 1.3 per cent and 1.7 per cent. Key Asian markets ended up on Tuesday due to strong corporate profits. European markets were also trading with gains on hopes that US Fed may not raise rates.

"Most market watchers expect a positive guidance from Bernanke as hikes in interest rates do not seem to be curbing inflation effectively," Rashesh Doshi, Tower Securities dealer, said.

Doshi said as long as crude oil prices remain a concern, inflation worries will persist.

Bank shares were notable gainers on Tuesday, with lead Nifty gainer Punjab National Bank ending up nearly 8 per cent, and ICICI Bank, and Oriental Bank of Commerce closing 4-5 per cent up from Monday.

CNX Bank index ended up over 3 per cent. Bank shares have been gaining on hopes that they will not have to roll back recent hikes in prime lending rates.

Other gainers among Nifty shares included Steel Authority of India, up 5.2 per cent, GlaxoSmithKline Pharmaceuticals, up 4 per cent, and Bharti Airtel, up 3 per cent.

Hindustan Petroleum and Indian Oil ended 1 per cent and 1.5 per cent up after the government said oil retail companies would be allowed to revise retail prices monthly.

Zee Telefilms was the prominent loser, down 1 per cent. Most sector indices ended up, with BSE Oil and Gas index advancing 2 per cent. Gainers outnumbered losers 2:1 on BSE.