BackMarkets jump on Infosys results; IT, banks lead
Markets jump on Infosys results; IT, banks lead
PremiumMumbai: Markets ended up 2.6% on Wednesday to their highest close in over three weeks as investors cheered results from IT industry bellwether Infosys and shrugged off data suggesting growth in Asia’s third-largest economy was losing steam.
Strong revenue growth from India’s No. 2 software services exporter and a less-than-expected cut in its full-year sales outlook began the quarterly earnings season on a high, offsetting fears of slowdown at home and further afield.
Markets rose as much as 2.7% on a strong closing rally after a slight retreat on data showing industrial output in August grew less than expected and early falls in European markets on continued fears regarding the region’s debt crisis.
“Traders are rushing to cover their short positions, and that is creating a sense of euphoria in the market."
Nasdaq-listed Infosys’ shares led the market, closing up 6.98% at 2,679.35 rupees, having risen as much as 7.2%.
The main 30-share BSE index closed up 2.55%, or 421.92 points, at 16,958.39 points, its highest close since Sept. 21.
The rise was mainly driven by strong gains from Infosys and heavyweight firms Reliance Industries , which closed up 2.74%, and State Bank of India , which ended up 6.09%.
All but three of the index components ended in positive territory.
Bangalore-based Infosys met expectations with a 9.7% rise in second-quarter profit as a weak rupee boosted margins, but cut its full-year revenue outlook and warned of global economic uncertainty.
The company said consolidated net profit rose to ₹ 1,906 crore ($387 million) for the fiscal second quarter, from 17.37 billion rupees a year ago. Revenue rose 16.6% to ₹ 8,099 crore, as the firm added 45 clients.
Rival IT stocks including Wipro , India’s third largest software services exporter, and Tata Consultancy Services , the industry No. 1, joined Infosys in leading gains, closing up 2.59 and 3.67%, respectively.
Shares in financials such as ICICI Bank and HDFC Bank , which closed up 3.27% and 2.11% respectively, jumped after the sluggish industrial growth data raised hopes the central bank would rethink its hawkish policy.
India’s market has been battered in recent months by surging inflation and interest rates, concerns about slowing domestic economic and earnings growth, and worries over the health of the U.S. recovery and the euro zone.
But the markets, which closed down on Tuesday after overseas economic gloom erased early gains, maintained their initial positivity despite downbeat comments from European policymakers suggesting no quick fix to the debt crisis there.
The 50-share NSE index gained 2.51% to 5,099.40 points. In the broader market, gainers were ahead of losers in the ratio of 2.4:1 on total volume of about 562 million shares.
Japan’s Nikkei benchmark fell 0.4%, underperforming the rest of Asia, where the MSCI ex-Japan Asian share index rose 1.4% and China’s Shanghai Composite ended up 3% in its biggest single-day gain in about a year.
European shares bounced back after a shaky start on Wednesday on gains from mining firms and expectations that Slovakia will soon give its long awaited approval for the euro zone rescue fund.
STOCKS
State Bank of India rose 6.09% after a finance ministry official told local media on Tuesday that the government would inject ₹ 3000 crore ($608 million) into the lender to shore up its capital base.
Patel Engineering rose 3.6% after its managing director said it was looking to divest 10-20% stake in a hydro power project through private equity route.
Max India rallied 9% after South Africa’s Life Healthcare said it would pay about $108 million for a quarter stake in the Indian company’s hospitals unit Max Healthcare.
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