SBI, ICICI Bank gain as Sensex fluctuates

Stocks swung between gains and losses as lenders offset declines in software exporters and property developers.

State Bank of India (SBI) and ICICI Bank surged after the central bank pared the list of companies whose loans need to be provided for against the risk of default. Wipro, the third-biggest technology company, plunged the most in three years after its net income missed estimates. Tata Consultancy Services and Infosys, the largest, slid more than one per cent each.

The S&P BSE Sensex added 0.1 per cent to 25,880.38 at the close, after changing direction six times. The gauge came within 0.6 per cent of erasing this year's decline before paring gains in the last hour of trade. The Reserve Bank of India on Wednesday said banks won't have to provide for outstanding loans to 20 of the 150 firms it had listed in December.
 

The move will likely boost March-quarter earnings of state-run lenders, according to K R Choksey Shares & Securities.

"Banks will heave a sigh of relief," Deven Choksey, managing director of the Mumbai-based brokerage, said in an interview to Bloomberg TV India. "Stressed assets at the lenders will start performing as economic recovery gathers pace."

State Bank increased 3.8 per cent, the most since March 30. ICICI Bank soared 6.3 per cent to pare this year's loss to 3.2 per cent. Bank of Baroda surged 3.3 per cent to its highest level since January 1. Punjab National Bank jumped 5.1 per cent. Canara Bank rose 4.4 per cent to its highest level since January 12.

Wipro slumps
TCS and Infosys kicked off the March-quarter earnings season, reporting results that beat estimates. Wipro slumped 7.1 per cent, the most since April 2013, after fourth-quarter net income of Rs 2,240 crore ($338 million) missed the Rs 2,350 crore estimated by analysts. TCS slid 1.1 per cent, while Infosys lost 1.4 per cent after rising 6.1 per cent over the last two days.

Investors are focusing on the quarterly earnings for signs of economic growth filtering to through to company bottom lines. Profits have dropped in four of the past five quarters in the worst run since the global financial crisis. That's despite the government forecasting India to grow faster than any other major economy in the fiscal year ended March.

Analysts estimate net income growth of two per cent in the March-quarter, data compiled by Bloomberg show.

Earnings outlook
"After several quarters of earnings decline we are beginning to see earnings trending to move up and that's a good sign," Chakri Lokapriya, the Mumbai-based chief investment officer at TCG Advisory Services Pvt, which has about $3 billion in assets worldwide, said in an interview with Bloomberg TV India. "Money flow will follow corporate earnings and stability of the currency, and both are turning positive from an Indian context."

Oil & Natural Gas Corp, the largest state explorer, climbed for a second day, gained 1.5 per cent. Tata Motors, owner of Jaguar Land Rover, added 1.8 per cent. Maruti Suzuki India, the maker of half the cars sold in India, rose one per cent.

Bharat Heavy Electricals, a power-equipment maker, tumbled 3.1 per cent to trim this month's gain to 13 per cent. ITC, India's biggest cigarette company, lost 1.7 per cent, while Bajaj Auto, a motorcycle maker, declined 1.4 per cent.

Godrej Properties fell the most in two months. Sobha retreated 4.2 per cent, while Prestige Estates Projects lost 4.1 per cent. The S&P BSE India Realty Index decreased 1.5 per cent, the most in two weeks.

Foreign investors bought $156 million of domestic stocks on April 18, taking this year's inflows to $1.4 billion. The Sensex has rebounded 13 per cent from a February low and trades at 15.9 times 12-month projected earnings. That compares with 12.1 for the MSCI Emerging Markets Index.