Mumbai: Indian stocks climbed, with the benchmark index holding at a seven-week high, as a drop in lenders countered a rally in software exporters.
The S&P BSE Sensex added 0.1% to 20,149.85 at the close in Mumbai, completing a fourth week of gains. Volume was 24% higher than the 30-day average. Tata Consultancy Services Ltd (TCS) rose to a record, leading its peers higher, on profit that exceeded estimates. ICICI Bank Ltd declined to a 10-month low, pacing losses among lenders.
India’s S&P BSE Infotech index of 10 software makers is trading at levels last seen during the 2000 dot-com bubble as an economic recovery in the US and a weakening rupee boost earnings prospects. A gauge of lenders sank 6.2% this week, the most since the period ended December 2011, after the central bank’s decision on 15 July to raise two interest rates to steady the rupee sparked a sell-off in bank shares.
“Strong earnings from technology companies is supporting the markets and banks are getting hammered on fears the RBI may raise rates further to support the rupee,” R.K. Gupta, who helps oversee about $743 million as managing director at Taurus Asset Management Co., said by phone from New Delhi. “Investors will watch out for Reliance’s earnings for further direction.”
Reliance Industries Ltd, the owner of the world’s largest refining complex, added 0.7% to Rs.923.7. First- quarter net income was Rs.5,350 crore, beating the Rs.5,250 crore median of 32 analysts’ estimates compiled by Bloomberg. Earnings were announced after markets closed. The stock has the second-highest weighting in the Sensex.
TCS, Asia’s largest software maker by market value, surged 5% to Rs.1,742.8, the highest price since its trading debut in August 2004. Net income climbed 16% to Rs.3800 crore in the June quarter from a year earlier, beating the Rs.3,750 crore median of 40 analysts’ estimates compiled by Bloomberg.
The company joined smaller rival Infosys Ltd in signalling demand for outsourced software work is rising in North America, the largest market for both companies that have a combined 14% weighting in the Sensex. Infosys, whose sales forecast in dollar terms exceeded analysts estimates, gained 1.7% to Rs.2,847.45.
The S&P BSE IT index advanced 2.81% to 7,097.29, the highest close since March 2000.
Only one out of the six Sensex members that have reported earnings so far have trailed analysts estimates for the three months ended June. That compares with 27% companies that missed forecasts for the March quarter and 43% in the three months through December, data compiled by Bloomberg show.
ICICI Bank lost 2.6% to Rs.959.30, the lowest close since September 2012. Rival HDFC Bank Ltd decreased 0.6% to Rs.680. State Bank of India, the biggest lender by assets, lost 0.7% to Rs.1,811.3. The S&P BSE Bankex fell 1.8% to 12,543.48.
Housing Development Finance Corp. Ltd tumbled 3.1% to Rs.803.2, the lowest price in three months.
Tata Motors Ltd, the owner of Jaguar and Land Rover, paced gains among automakers, gaining 2.7% to Rs.294.65.
Hindustan Unilever Ltd, the biggest home-products maker, has surged 14% this week, the most since the period ended 3 May. The stock fell 0.3% to Rs.686.1 on Friday.
Global investors sold $19 million of local shares on 18 July, paring this year’s inflows to $12.35 billion, data compiled by Bloomberg show. Overseas funds have sold a net $982 million of Indian stocks this month, the most among 10 Asian markets tracked by Bloomberg, extending June’s $1.8 billion sell-off.
The Sensex trades at 14 times projected 12-month earnings, the most expensive since Oct. 9. That compares with the MSCI Emerging Markets Index’s 10 times. The Sensex has risen 3.7% this year.
The CNX Nifty index on the National Stock Exchange fell 0.2% to 6,029.20. India VIX, which gauges the cost of protection against losses in the Nifty, fell 0.8%.