Sensex closes F&O expiry below 20K; PSU banks rally

The BSE Sensex fell on Thursday as ICICI Bank was hit by profit-booking after beating forecasts with its quarterly earnings, while the expiry of January derivatives kept trading volatile towards the end of the session.

The Nifty closed at 6,034, lost 21 points and the Sensex was down 110 points to end below 19,990.

ICICI Bank shares fell 1.93 percent, after earlier hitting it's highest since November 16, 2010, on profit-taking after the private sector bank posted a forecast-beating 30.2 percent rise in third quarter net profit. The private sector lender's shares have risen 6.5 percent this month as of Wednesday's close on hopes of rate cut and better earnings.

However, state-owned banks, which have cheaper valuations than private sector peers, rally after reporting improved asset quality in the October-December quarter.

Punjab National Bank shares gained 9.41 percent, while Union Bank of India shares closed up 5.81 percent after their earnings results.

Bank Nifty recovered from low point of the day to trade marginally down after public sector banks showed improvement in asset quality; although they reported average growth numbers. While public sector banks Punjab National Bank   (PNB) and Union Bank of India announced better-than expected third quarter results, private sector biggie ICICI Bank's numbers were inline with the expectations .

However, this failed to de-stress markets which were trading quiet since morning. PNB was trading with 6 percent gains, Union Bank showed 5 percent upside and ICICI Bank failed to recover from morning lows. It was quoting at Rs 1,203.65, down Rs 10.60, or 0.87%. ICICI Bank had run opver 40 percent in one year, and today's numbers, void of positive surprise, failed to impress investors.

At 13.09 PM, the Sensex was trading lower 79.57 points at 19925.43, and the Nifty was down 14.20 points at 6041.55.

Following the footsteps of its public sector counterparts, Bank of Baroda rose 2.6 percent.

Among the individual stocks which were trading above 2 percent were, Oil India and IOC (appreciated over 2 percent), Wockhardt (2.74 percent), NHPC  (2.51 percent), BHEL 2.66 percent, Asian Paints (2 percent) and Jet Airways (2.4 percent).

With the revision of India's FY12 GDP growth to 6.2 percent from 6.5 percent, the stage is set for a reality check. The government has also pegged FY12 gross domestic savings at 30.8 percent, down from 34 percent earlier. However, FY 11 GDP had produced better results than initially thought. The revised number for FY11 stands at 9.3 percent from 8.4 percent estimated earlier.

The markets meanwhile have not reacted to this news and remained devoid of action on the expiry day. At 11.27 AM, the Sensex fell 40 points at 19965.97, and the Nifty was down 6.20 points at 6049.55. Experts say volatility will be towrds the downside rather than upside. Experts say rollovers are good on oil and gas stocks. Individually, Tata Steel and Cipla are seeing rollovers on the long side.

ICICI Bank continues to trdae down ahead of its result. Other banking stocks like SBI, HDFC Bank, Axis Bank and HDFC were all trading with marginal cuts. Bank Nifty was trading with a cut of less than a percent.

In the midcaps, Jet airways was trading up 1.9 percent on news that Jet Board may finalise Etihad deal on Friday. Sources say the deal is likely to take place between Rs 750 and Rs 800 per share.

Godrej Consumer products fell over 1.9 percent after it announced its numbers in the late morning trade.

Key indices opened up marginally in the red on the expiry day. The mood was dampened by weakness in global cues and the outcome of Cabinet Committee on  Invesment (CCI) meet on Wednesday, which failed to clear stalled projects. The Sensex started down 22 points down at 19982.99, and the Nifty dropped 4.50 points in the first trade at 6051.25.

Largecaps begun the day on a sticky note, with ICICI Bank gojng down quarter of a percent ahead of its results. Stocks which begun their day in the green include Lupin, Bajaj Auto, HCL Tech, Infosys, BPCL, HDFC, Bharti and Ambuja Cements.

Midcaps opened almost static, with more losers than gainers. Suzlon Energy rose 8% on news of it bagging a 350 mega tonne RE power project; the stock was the biggest gainer on the index. Other gainers include Gujarat NRE Coke, which rose on news that  Jindal steel has offered to buy its Austarlian arm. NHPC up, Network 18, PFC and Balrampur Chini were others gainers. A CCI meeting to form a sugar policy may move sugar stocks today.

L&T Finance is a major underperformer , falling 4 percent post it disappointing results. The stock has corrected 20 percent in last few sessions.

From around the globe, GDP of the world's largets economy - the US - dropped at a 0.1 percent annual rate.