Sensex regains 17000, SBI jumps on capital infusion

India's benchmark indices rebounded strongly Tuesday, surging over 1% in early trade. The Sensex traded nearly 170 points higher at 17,031 and the Nifty advanced 54 points to 5,140 at 0925 hours.

The gains came on the back of strong buying interest in index heavyweights like PSU lender State Bank of India (3.5%) which was also the biggest gainer on the Nifty index. The stock reacted on the back of government approval for Rs 7,900 crore fund infusion which will raise the bank's capital adequacy to 9%.

Another PSU lender PNB (2.5%) and private banking major ICICI Bank (2%) were also among the other big gainers on the Nifty index. These two banks will report their third quarter numbers today. The banking index on the Bombay Stock Exchange surged 2% and was the biggest gainer among all other groups of stocks.

Stocks of Tata Global Beverages traded with strong gains, a day after the company outlined its plans to roll out stores in alliance with global coffee chain Starbucks. Tata Coffee, which will be the sourcing partner for coffee beans in the country, also traded with nearly 1 per cent. 

All other sectoral indices traded higher. Metal, energy, realty, auto and consumer durables stocks traded with over 1% gains. However, capital goods stocks continued to be under pressure. BHEL and L&T traded flat after opening lower.
NTPC and Coal India were among the losers on the Nifty index. Coal India was down after the company cut prices of many varieties of coal.

Analysts said investors should use dips to buy. "This correction is a healthy one and I believe that 5,000-5,050 should be the target and a good entry point for longs. 4,900, which is 50% retracement, should be viewed as an extremely strong support going forward," Independent analyst Sarvendra Srivastava said.

Global cues were subdued on the back of continued uncertainty in Europe but Asian markets recovered after a weak start. Japan's Nikkei was flat after factory output rebounded in December. Markets in Hong Kong, Taiwan and South Korea traded with over 0.5 per cent gains.

Overnight, the Dow recovered from deep cuts to end with just 0.1 per cent losses amid reports that Greece was nearing a deal to reduce its debts with private creditors.