Sensex gains 109 pts; banks lead, HCL Tech & TCS tank 9%

Sanjeev Zarbade of Kotak Securities believes the performance of the Indian equities remains contingent on resumption of FII flows.

While Mehraboon Irani expects levels of 7400 to be breached by the market on the downside, he suggests investors to buy into stocks of their choice. He says the global factors will continue to have a significant impact on the market and any negative news may lead to lower rupee levels like 62 against the dollar.

However, reducing inflation, lower commodity prices and expected reforms push remain significant tailwinds for the markets, says Zarbade.

Banks topped the buying list today with the Bank Nifty rising 2.5 percent as top lenders State Bank of India, HDFC Bank and ICICI Bank rallied 2-3 percent while housing finance company HDFC gained 1.7 percent.

Axis Bank rose 2 percent ahead of results that announced post market hours. The private sector lender met street expectations with the second quarter net profit rising 18.3 percent Y-o-Y led by higher other income and net interest income but higher provisions limited profitability. NII jumped 20 percent with stable asset quality.

Two-wheeler maker Hero Motocorp rallied 3 percent on reporting a 58 percent growth in Q2 profits led by other income.

Zee Entertainment gained 3 percent after the company beat expectations on operational front. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 3.5 percent to Rs 321 crore and margin expanded by 50 basis points to 28.7 percent on lower operating cost. Analysts had expected both at Rs 320 crore and 27.5 percent, respectively.

Larsen and Toubro, BHEL, Mahindra and Mahindra, Bharti Airtel, Cipla and Tata Power were other prominent gainers with 2-3.4 percent upside.

However, technology stocks saw huge selling pressure with the CNX IT index falling 4 percent. It was a twin blow for the tech sector; TCS tanked nearly 9 percent after dollar revenue growth missed expectations. The company said softness in certain businesses may continue for two more quarters and that meeting FY14 growth will be difficult in FY15.

HCL Technologies too took a hard knock on similar growth worries, falling 9 percent. Dollar revenue for Q1 came in lower than estimate at USD 1,433 million.

Sesa Sterlite, Hindalco, Tata Motors, Wipro and Jindal Steel fell 1-2.8 percent.

About 1335 shares advanced while 1505 shares declined on the Bombay Stock Exchange.

Meanwhile, the Indian rupee recovered sharply, up 39 paise to close at 61.44 a dollar after falling to 7-month low of 61.83 in previous session. Fresh selling of dollars by exporters and banks supported the rupee recovery.

On the global front, European markets gained more than a 1 percent while Asian markets like Japan and Taiwan Weighted fell another 1-1.5 percent after yesterday's blow. A comment from hawkish Federal Reserve official James Bullard on Thursday that the Fed should continue bond buying lifted sentiment and surprised many observers.