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Mumbai: India's stocks benchmark rose, posting its biggest weekly advance in nine years, led by ICICI Bank, after some investors judged the recent drop in financial stocks to be overdone with respect to their earnings outlook.
ICICI Bank, India's second-largest lender, gained the most in almost five years. HDFC Bank, the country's third-biggest, rose the most in eight months.
"Banks were beaten down so badly that valuations have become reasonable at these levels," said P.R. Dilip, managing director at Impetus Wealth Management. "If one goes by the earnings of Axis Bank, the earnings may not be as depressing as the market was expecting."
Satyam Computer Services and Wipro led software developers lower on concern the outlook for earnings growth remains weak as customers cut spending amid a global economic slowdown.
The Bombay Stock Exchange's Sensitive Index, or Sensex, rose 523.55 points, or four per cent , to 13,635.40. The index climbed 1.2 per cent in the week. The S&P CNX Nifty Index on the National Stock Exchange advanced 145.05, or 3.7 per cent, to 4,092.25.
The Bombay Stock Exchange's banking index has dropped 46 per cent this year compared with the Sensex's 33 per cent decline. The Bankex index's 14-day relative strength index, which measures how rapidly prices rose or fell, dropped to 29 on July 16. A level below 30 suggests to some investors a signal to buy.
ICICI added 12 per cent to Rs617.45, the most since August 21, 2003. HDFC Bank gained 7.9 per cent to Rs1,034.50, its biggest advance since November 14, 2007.
Axis Bank Ltd., India's fourth largest, added 7.9 per cent to Rs685.60. The lender on July 14 said first-quarter profit rose 89 per cent as it earned more from increased lending to companies and advisory fees.
Satyam, India's fourth-largest software company, fell to its lowest since March 18. The stock was the worst performer today on the benchmark, after it kept the sales forecast for the year ending March 31, 2009, unchanged in dollar terms. Wipro, the third-largest computer-services provider, was the second-worst Sensex performer after it said some clients scaled back orders.
Satyam fell 7.5 per cent to Rs383.55. Wipro declined 3.7 per cent to Rs366.25.
The two companies join Infosys Technologies in signalling an uncertain sales outlook for the fiscal year as banks and financial-services companies deal with the collapse of the US subprime mortgage market.
Record oil prices and rising inflation are also contributing to an economic slowdown in the US, the largest market for Indian computer-services providers.
Overseas funds sold a net Rs2.1 billion ($52.2 million) of Indian stocks on July 16, increasing their net outflow this year from equities to $7 billion, according to the nation's stock market regulator.
Cipla added Rs2.9 r, or 1.4 per cent, to Rs215.10. India's third-biggest drugmaker by market value may say first-quarter profit gained 21 per cent to Rs1.45 billion, according to a median estimate of analysts surveyed by Bloomberg News.
Chennai Petroleum rose Rs16.55, or 5.7 per cent , to Rs304.95. The unit of the country's biggest refiner said net profit in the first quarter more than doubled to Rs7.03 billion.
Gujarat NRE Coke gained Rs9.45, or 9.1 per cent, to Rs113.65. India's largest producer of the fuel used by steelmakers said first-quarter profit more than doubled to Rs944 million.
Infrastructure Development Finance added Rs14.5, or 15 per cent, to Rs109.65. The Indian financier of roads, ports and utilities, reported first-quarter profit rose 20 per cent to Rs2.17 billion.
Indiabulls scores
Indiabulls Financial Services added Rs10.75, or 4.6 per cent, to Rs242.20. The lender, backed by billionaire Lakshmi Mittal, and state-owned trader MMTC have received approval for a proposal to set up a commodity exchange in the South Asian nation.
The Forward Markets Commission has given "in-principle" approval to MMTC's proposal for a nationwide multi-commodity exchange to be set up in partnership with Indiabulls, the two companies said.
Jaiprakash Associates climbed Rs11.4, or 7.7 per cent, to Rs160.50. The nation's biggest builder of dams may say first-quarter profit gained 27 per cent to Rs1.78 billion, according to a median estimate of analysts surveyed by Bloomberg.
Kirlosker Brothers dropped Rs20.8, or 11 per cent, to Rs165.10. The Indian maker of pumps and valves reported a first-quarter loss of Rs44.8 million, compared with net income of Rs257.1 million a year ago.
Punj Lloyd advanced Rs11.05, or 5.3 per cent , to Rs220.90. The Indian engineering and construction company won a $108 million order from Tecnicas Reunidas of Spain.
Ranbaxy Laboratories dropped Rs15.6 rupees, or 3.5 per cent, to Rs436.90. The nation's biggest drugmaker saw its stock rating cut to "sell" from "neutral" at Goldman Sachs.
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