Markets stage a comeback

There was finally some reprieve for the beleaguered markets. After being battered by around 575 points in the past three trading sessions alone and sliding by nearly 200 points post the disappointing IIP numbers, the Sensex has managed to recoup its losses and actually eked out decent gains of 57 points at 17520 and the Nifty has added 22 points at 5248. There is outperformance on the broader market front; the midcap index is at 6348, higher by 0.9% and the smallcap index is at 7667, up 1%. The rate-sensitive banking and auto stocks are in the fore-front of the pullback.

The markets had begun on a tentative note following their recent decline and the slowdown in industrial production in December, as reflected in the IIP numbers, only dragged the indices further south in a knee-jerk reaction of sorts. But a recovery in the equally hammered Hong Kong bourses and a possibly belated realisation that the IIP numbers were already factored in, led to an intra-day reversal just when the chips seemed down. Only time would tell how far the pullback rally would go.

The IIP data for the month of December came in at 1.6% compared to 2.7% in November. The manufacturing sector growth stood at 1% compared to 19.6% during the previous year, electricity sector grew by 6% versus 5.4% and the capital goods sector growth came in at 13.7% versus 42.9%.

The banking sector is up more than 1% and has emerged as the leading sectoral gainer on the BSE. In the financials space, HDFC has jumped by 3.3% at Rs 617, ICICI Bank has gained 1.9% at Rs 980 and HDFC Bank has added 1.5% at Rs 2051. The auto space is seeing the likes of Bajaj Auto strengthening by 2.7% at Rs 1246, Tata Motors gaining 1.7% at Rs 1122 and Maruti adding 1.5% at Rs 1176.

On the other hand, the previous day's recovery on the RCom counter has proved to be short-lived. The ADAG plunged by 3.2% at Rs 93, Reliance Communications has retraced some ground from its historical low of Rs 91 touched in the early part of this session, but is still down 3.2% at Rs 93 and is the top loser on the BSE. Ditto with Reliance Infra, which has lost 1.5% at Rs 576. And the metal space is also weak; Hindalco has shed 2.55 at Rs 210 and Tata Steel has lost 2.2% at Rs 586.

The market breadth is weak. Out of 2847 stocks traded on the BSE, there are 1718 advancing stocks as against 1043 declines.