Nifty recovers to test 5250; banks, auto lead

Indian equity benchmarks recovered smartly from day's low to back above 5200 but remained choppy a bit at 13:28 hours. Financials led the major support followed by L&T and NTPC. Auto companies' shares too were quite supportive.

However, the sell-off in telecom, metal, PSU oil & gas, technology, Anil Dhirubhai Ambani Group, FMCG and private sector power companies' shares limited the gains.

Alok Sama of Baer Capital feels the worst is probably over for India. "We have probably seen the worst run-up in oil prices. Also, I feel inflation fears here are probably over-done," he told CNBC-TV18.

On the back of a fairly robust earnings growth, he feels 17,500-18,000 on the Sensex and 5,000 on the Nifty are reasonable levels to think of in terms of markets being well supported.

The 30-share BSE Sensex was trading at 17,521, up 58 points and the 50-share NSE Nifty gained 22 points at 5,247. The broader indices too jumped nearly one percent.

Benchmarks were fallen when the December IIP data announced but experts feel that these numbers. The industrial output came in in-line with expectations but the sectoral growth was quite disappointing.

A growth in index of industrial production (IIP) for December was 1.6% as against 2.7% in previous month. Consumer non-durables growth was in negative 1.1% versus positive 3% and capital goods growth too came in negative 13.7% versus 42.9% (YoY). Growth in segments like manufacturing, consumer durables and mining fell sharply while electricity sector growth improved at 6% as against 5.4% (YoY).

DK Joshi principal economist at Crisil, too expressed no surprise at the numbers and said that a strong base was expected to pull it down.