Mumbai: Indian shares rose for the second week and closed 0.3% higher on Friday, propped up by gains in Tata Consultancy Services as brokerages cheered the top outsourcer’s forecast-beating quarterly earnings by raising their target prices.
JPMorgan, BNP Paribas, Macquarie, HSBC, RBS Equities and Kotak raised their target price for TCS, indicating their optimism about the outlook despite woes in Europe, a key market.
TCS rose as much as 6.9% to Rs838.30, and was the top gainer in the main index.
“We believe TCS’s broadbased 8-plus% volume growth, similar to Infosys, indicates strong demand momentum,” RBS analysts Pankaj Kapoor and Srinivas Seshadri said in a note. “The stock could see a dual uplift near term from earnings upgrades and valuation rerating closer to Infosys.”
The 30-share BSE index rose 0.26% or 46.36 points to 17,955,92, taking gains for the week to 0.7%. Seventeen of its components closed in the green. The 50-share NSE index rose 0.3% to 5,393.90 points.
India’s benchmark index is up 2.8% so far this year, helped by foreign fund inflows of $8.4 billion. It had witnessed a spectacular 81% rally in 2009, after foreigners pumped in a record $17.5 billion.
So far in 2010, the index has outperformed its peers such as China’s Shanghai Composite Index and Brazil’s Bovespa, which have declined 26% and 7.4% respectively.
After market hours on Thursday, TCS said its June-quarter net profit rose 21% to Rs1,840 crore ($395 million) from Rs1,520 crore a year ago, under US accounting standards. TCS closed 6.2% higher, its highest single-day gain in a year.
The cheer for the sector leader also pulled up rivals. Infosys Technologies, which had reported a rare drop in quarterly net profit on Tuesday, gained 0.7% while third-ranked Wipro, which details its earnings next week, rose 0.1%.
“The market is likely to fare decent in near term,” said Gajendra Napal, CEO of Unicon Financial. Key companies’ earnings, including HDFC Bank and Wipro, will set the market’s direction next week.
“Whenever we saw a sharp decline in the market in recent times, it was always on low volumes,” Nagpal said. “This only hints that investors are staying on the sidelines when they are cautious. They are definitely not in a hurry to sell.”
Some market participants however, were cautious.
“We are now concerned about the slowing down effects of Chinese economy and fears of a double-dip recession in the U.S.,” said Ambareesh Baliga, vice-president of Karvy Stock Broking. “On the domestic front, industrial output and inflation are worries.”
Lenders closed mixed. While inflationary concerns weighed on the outlook for interest rates, there were expectations built that robust economic growh will fuel loan demand.
Top private lender ICICI Bank rose 2.3% while its smaller rival HDFC Bank dropped 1.2%. Leading lender State Bank of India firmed 0.1%.
Advancing shares led declining ones in a ratio of 1.2:1 in the broader market in a volume of 355 million shares.
Elsewhere, Japan’s Nikkei shed 2.9% while MSCI’s measure of Asian shares other than Japan shed 0.3%. By 4:12pm, the FTSEurofirst 300 index of top European shares rose 0.4%.
Private-sector lender Axis Bank hit a record high at 1,367 rupees, after it said on Thursday its April-June net profit rose 32%. The stock closed 1.1% higher at Rs1,359.10.
Technofab Engineering debuted on the BSE at Rs272, up 13.3% versus its issue price of Rs240. The shares rose further and closed at Rs295.65.