Telco stocks upgrade sends Indian shares higher

Credit Suisse upgraded top mobile operator Bharti Airtel to “outperform" “neutral", which sent the shares soaring as much as 10.4%.

Also, Singapore Telecommunications (STEL.SI), Southeast Asia’s largest telecoms firm, said it bought around 1.6 million shares in Bharti from the open market for about S$12.45 million ($9.03 million), hiking its stake by 0.04% to 32.04%.

Credit Suisse also raised its rating on Reliance Communications to “neutral" from "underperform", and Idea Cellular to "outperform" from “underperform".

The 30-share BSE Index .BSESN rose 1.03% or 181.81 points to 17,833.54, taking the gains this week to 2.1%, with 22 of its components logging gains.

World markets cheered Wall Street’s higher close on Thursday on the back of a fall in US jobless claims and solid sales from a handful of large retailers.

India’s benchmark index has gained 0.75% so far in July, supported by around 107 million of foreign fund inflows.

For this week, the benchmark has underperformed vis-a-vis the broader MSCI’s measure of Asian markets other than Japan, which gained 3.2%.

Double-dip recession fears hit equity funds globally in early July. According to EPFR Global, equity funds worldwide suffered more than $11 billion of net outflows in the first week of July.

Indian market will now look to the June-quarter earnings season, which starts next week, for further cues. The advance tax numbers hint at overall earnings and revenue growth.

The May industrial output data due on Monday and June’s wholesale price inflation data due on Wednesday will also be watched for further cues.

A Reuters forecast showed industrial output may have grown 16% in May from a year earlier, lower than an annual growth of 17.6% in April.

“For telecom stocks, the worst seems to be already in the price. Now, we are waiting for the June-quarter results," said Jigar Shah, vice-president of equity sales at brokerage Motilal Oswal.

“We believe that concerns on competition, regulation, 3G auction fee and RIL’s entry have been overstated," Credit Suisse said in a note on Thursday.

Bharti Airtel closed 9.7% higher. Smaller rivals Reliance Communications and Idea Cellular climbed 2.8% and 13.3% respectively.

“Infosys is rising in a run up to results. People are expecting some positive surprises there," said Shah of Motilal Oswal.

IT bellwether Infosys, which unveils its quarterly earnings on 13 June, rose as much as nearly 2% to a record high of Rs2,882. Its earnings are often dubbed as a trendsetter for the sectoral peers.

Macquarie expects Infosys to raise fiscal year 2011 US dollar revenue growth guidance to 17-19% from 16-18%.

Its rival Wipro rose 1.01% while sector leader Tata Consultancy Services dropped 0.3%.

Robust economic growth forecast, led to expectations that loan demand would pick up in the world’s second-fastest growing major economy.

Top lender State Bank of India gained 0.5% while leading private-sector rivals ICICI Bank and HDFC Bank rose 1.1% and 3.1% respectively.

In the broader market, gainers outnumbered losers in a ratio of 1.2:1 in a relatively better volume of 443 million shares.

The 50-share NSE index rose 1.1% to 5,352.45 points.

By 3:59pm, the MSCI world equity index and the Thomson Reuters global stock index .TRXFLDGLPU were up 0.2% each.

STOCKS

Bajaj Auto rose 0.7% to Rs2,417.60 after the automaker signed an agreement with Renault-Nissan alliance to manufacture an ultra low-cost car to be sold in India and other emerging markets, which would be a rival to Tata Motors’ Nano.

Hindustan Dorr Oliver Ltd rose nearly 3% to Rs126.05 after the company said it won an order worth 8.3 million pounds.

Entertainment Network slid 15.6% to 198.25 rupees after its board approved selling its entire stake in Times Innovative Media Ltd to Bennett, Coleman & Co Ltd for 450 million rupees.

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