Mumbai: Indian shares ignored weak world markets to test fresh 2-year highs, ending a choppy Wednesday session 0.6% higher, as outsourcers cheered robust results and guidance from peer Cognizant Technology Solutions Corp.
World markets were in the red as concerns over global economic recovery returned to haunt investors. Data overnight showed US consumer spending and incomes were flat in June, while an index of pending sales of previously owned homes fell to a record low.
US-based Cognizant on Tuesday reported a profit that topped market estimates for the sixth straight quarter, helped by a surge in discretionary projects, and raised its 2010 revenue outlook well above what Wall Street was looking for.
The company saw robust spending from clients across all its business segments and geographies. “The increased thrust on offshoring budget of clients is reflected by this strong growth which will benefit other large Indian IT vendors,” Pinc Research said in a note.
India’s no. 1 outsourcer Tata Consultancy Services rose as much as 4.5% to a record high of 871 rupees, and later closed 4.4% higher. Sector peers Infosys and Wipro climbed 3% and 4% respectively.
Pinc Research said it continues to be positive on the IT sector and has a buy rating on TCS, Wipro and Infosys.
The 30-share BSE index rose for the third straight day and closed 0.57% or 102.61 points higher at 18,217.44, with two-third of its components advancing. The 50-share NSE index rose 0.5% to 5,467.85 points.
It rose to as much as 18,249.46 points earlier, its highest level since February 2008.
“Tech stocks saved our day on the back of Cognizant results. Business momentum in the technology space appears to be strong,” said Vaibhav Sanghavi, director of Ambit Capital.
Improvement in rainfall also added to the positive sentiment. Rainfall was a third higher than average on Tuesday and total precipitation since June 1 was only 2% below average, as heavy showers in the past two weeks narrowed the monsoon deficit that stood at 16% on 19 July, data from the weather office showed.
“Liquidity flow will support our market in the near term. the interest in India is definitely not waning,” Sanghavi said.
The benchmark index is up 4.3% so far this year, with foreign funds investing $10.7 billion in Indian equities. Some of these investments were directed towards primary market offerings.
In 2009, the main index witnessed a spectacular 81% jump, backed by record foreign fund inflows of $17.5 billion.
Larsen & Toubro rose 1.2% as the top engineering and construction firm said it had got orders worth Rs1,025 crore for projects in the western city of Mumbai and a cement plant.
Energy giant Reliance Industries, which has the highest weight on the Sensex, declined 1%, after rising 1.6% over the past two sessions, on concerns that there were no immediate positive triggers for the stock, dealers said.
Financials closed mixed amid a tussle between hopes of improving demand for loans backed by strong economic growth and concerns over inflation.
Leading lender State Bank of India and private lender HDFC Bank dropped 0.3% and 0.5% respectively.
Top private lender ICICI Bank and mortgage lender Housing Development Finance Corp firmed 0.8% and 0.2% respectively.
Advancing shares outnumbered declining ones in the ratio of 1.1:1, while BSE clocked a volume of 382 million shares.
MSCI world equity index shed 0.3% at 1048 GMT while the more volatile emerging markets index was barely changed.
Steel strappings maker Midfield Industries listed at Rs154.90, a premium of 16% to its issue price of Rs133 a share.
The stock extended gains and closed at Rs163.05.
Strides Arcolab Ltd closed 1.7% higher at Rs460.70 as the drugmaker announced USFDA approval for ergocalciferol capsules, which are used as synthetic calcium regulator.
Non-ferrous metals producer Sterlite Industries declined 0.2% to Rs178.15 as copper prices drifted lower on London Metal Exchange.