Markets close up 1% led by software, financials

Markets close up 1% led by software, financials

Mumbai: Indian shares rode a global rally in equities and climbed 1% on Thursday, with export-driven outsourcer Infosys Technologies and financials leading the rise.

There were expectations that upbeat US earnings hopes would give a boost to investor appetite globally, and help draw in more portfolio investments, traders said. Quarterly earnings in India should also show robust growth as the country’s trillion-dollar economy is widely expected to expand around 8.5% in 2010/11 from 7.4% in the past year.

The 30-share BSE index closed up 1.03%, or 180.70 points, at 17,651.73, with 24 of its components advancing. The 50-share NSE index rose 1.1% to 5,296.85.

Any pick-up in foreign buying, which has slowed to $99 million in the first four sessions of July from $2.1 billion 1-29 June , will be a key driver for the index that is down 0.3% so far this month.

“From the long-term perspective, better monsoon and reforms by the government are definitely hinting to growth for Indian stocks," said Gajendra Nagpal, CEO of Unicon Financial. “But from a short-term view, things are uncertain. It all depends on global cues."

Annual monsoon rains have covered the entire country, the weather office said this week, raising the outlook for farm output and rural incomes, both vital to push economic growth in India that lacks proper irrigation.

Food prices eased in late June but fuel inflation accelerated keeping the case for the central bank to maintain a hawkish stance at its policy meet on 27 July.

However, investors shrugged off hardening interest rates and bought banks betting on their long-term outlook. Top lender State Bank of India rose 2.3% while rivals ICICI Bank and HDFC Bank gained 1.9% and 0.3% respectively.

Infosys, which releases quarterly result on Tuesday, climbed 1.6% on improving outlook hopes. “The results are likely to be good. Rupee was also fairly benign in the quarter," Nagpal said. Rivals Tata Consultancy Services and Wipro were up 1.7% and 0.6% respectively.

Advancing shares outnumbered declining ones in the ratio of 1.5:1 in the broader market on relatively better volume of 432 million shares.

Brokerage Prabhudas Lilladher expects quarterly revenue and profit after tax of the companies in the broader index to grow by 30.4% and 37.2% respectively.

“However, since the recovery in earnings really started from Q2FY10, we fear that the current quarterly growth is a near-term peak as the base effect starts wearing off," it said in a note.

Metal producers rallied as LME and Shanghai base metals gained cheering the rally in global equities. Non-ferrous metals maker Sterlite Industries firmed 3.6%, while aluminium producer Hindalco rose 2.1%. Tata Steel, the world’s eighth-largest producer of the alloy, gained nearly 2%.

Auto firms rose after an industry body forecast a 12-13 percent rise in car sales for 2010/11 after posting a near 31 percent rise in sales in June.

Leading car maker Maruti Suzuki climbed 1.5%, truck, bus and car maker Tata Motors rose 0.7% and utility vehicles and tractor maker Mahindra & Mahindra gained 0.3%.

Bharti Airtel gained 1.7% after the top mobile operator said late on Wednesday it would invest $600 million in Nigeria over the next three years, half within the next 12 months.

The MSCI world equity index was up 0.6% by 3:59pm. The Thomson Reuters global stock index rose 0.7%.


Infrastructure Development Finance Co rose 1.3% to Rs181.40 after the Economic Times reported the company would raise Rs840 crore by selling convertible securities to Malaysian state fund Khazanah and private equity firm Actis.

Oil explorer Cairn India rose 1.5% to Rs301 as crude oil prices rose to $75 per barrel.