Mumbai: India’s benchmark stock index rose for the second day, led by software exporters, after Tata Consultancy Services Ltd reported record third-quarter profit.
Tata Consultancy climbed 5.7%, its highest close. Earnings of the nation’s largest software services company exceeded analyst estimates after it won orders from Deutsche Bank AG and Hilton Worldwide Inc..
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Rival Wipro Ltd advanced the most in a month. The companies get about two-thirds of their sales from the US and Europe.
Lender Axis Bank Ltd gained after its rating was raised at Citigroup Inc.
“If we are going to see the developed markets come back in a big way and discretionary spending towards information technology outsourcing increase, then these companies tend to benefit,” said Amit Nigam, a fund manager at BNP Paribas Asset Management India Private Ltd in Mumbai, which manages $1 billion in assets.
The Bombay Stock Exchange’s sensitive index, or Sensex, gained 209.80 points, or 1.1%, to 19,092.05 points at close in Mumbai.
The index has dropped 9.1% from a 5 November peak amid concern the central bank will raise interest rates in its meeting next week to curb inflation.
Nigam said shares of lenders, energy and infrastructure companies look good post the correction as valuations are in a far more comfortable zone. He declined to specify shares.
Companies on the Sensex are valued at an average 18.1 times estimated earnings, compared with a recent peak of 20.1 times on 5 November.
The S&P CNX Nifty Index on the National Stock Exchange rose 1.2% to 5,724.05 points. The BSE 200 Index increased 1% to 2,357.72.
Tata Consultancy jumped 5.7% to Rs1,202.55, its highest closing level since the shares were listed in August 2004. Wipro, the third largest software service provider, advanced 2.5% to Rs478.55, its steepest climb since 16 December. Infosys Technologies Ltd, the second-largest, added 1.7% to Rs3,323.
Tata’s net income rose 30% to Rs2,370 crore ($520 million) in the three months ended 31 December, from a year earlier.
The average of 31 analysts’ estimates compiled by Bloomberg was for a profit of Rs2,190 crore.
The company gets 84% of its sales from America and Europe.Brokerage Kotak Institutional Equities added Wipro and ICICI Bank Ltd to its Top-10 list, removing GAIL India Ltd and Jaiprakash Associates Ltd, analysts led by Sanjeev Prasad wrote in a note to clients on Tuesday.ICICI Bank, the second-biggest lender, rose 1% to Rs1,011.45.
Axis Bank surged 4% to Rs1,278.25 after it was raised to buy from hold by Manish Chowdhary and other analysts at Citigroup, who said recent losses in the shares appear to be factoring in significantly higher stock risks and a weaker economy.
Global funds sold a net Rs53.7 lakh of Indian equities on 17 January, the ninth straight day of withdrawals, according to data on the website of the Securities and Exchange Board of India. That’s the longest string of sales since May.
India’s economic growth and corporate earnings lured foreign investors to buy a record $29.3 billion of local equities last year and made the Sensex the best performer and most expensive among the world’s 10 biggest markets.