Markets edge up 0.1% on earnings optimism

Markets edge up 0.1% on earnings optimism

Mumbai: Indian shares nudged up 0.1% on Wednesday, supported by higher Asian peers and a rise in investor appetite for riskier assets on signals of a global recovery in corporate earnings.

Private-sector lender ICICI Bank, construction firm Jaiprakash Associates and India’s top vehicles maker Tata Motors led gains in the main index.

Unitech Ltd, India’s second-largest listed real estate firm, rose 2.5% to Rs85.55 after it said late Tuesday that it would spin off its infrastructure businesses, including its investment in a telecoms firm, into a separate company.

“The market is watching the company results. And from what we have seen till now, being optimistic doesn’t seem to be a bad idea," Sonam Udasi, vice president at Mumbai-based brokerage BRICS Securities, said.

The 30-share BSE index ended up 0.07%, or 11.98 points, at 17,472.56 points, with 16 stocks advancing. The 50-share NSE index rose 0.3% at 5,244.90 points.

The benchmark had gained as much as 0.6% in the morning session, before losing steam on weakness in European stocks that were dragged down by banking stocks.

Traders also said some foreign funds sold Indian shares as they switched portfolios amid the ongoing quarterly corporate earnings season.

On Tuesday, the BSE index had snapped a 5-day fall as financial stocks led the market higher after the central bank raised rates, as expected, and as investors hoped policymakers would pursue a gradual tightening without stalling growth.

Investor sentiment worldwide has picked up on the view corporate earnings are indicating a continued recovery in the global economy, with big names such as Goldman Sachs and Apple reporting robust results.

“Good quarterly numbers are supporting the market, and the direction the market takes in coming days will be determined by how good forthcoming results are," said Alex Mathews, head of research at Geojit BNP-Paribas Financial Services, from Kollam in the southern Kerala state.

The BSE index is trading at 16.4 times its one-year forward earnings, making it more expensive than benchmarks in other emerging markets such as South Korea, Thailand, Brazil and Indonesia that trade at a multiple in the range of 9 to 14. Russia’s main index trades at just 6.8 times forward earnings.

But analysts say an upbeat outlook for corporate earnings and a steady stream of foreign funds inflows will keep a significant correction at bay.

On Wednesday, ICICI Bank gained 2% to Rs952.40, while Jaiprakash Associates rose 2% to Rs150.05. Tata Motors climbed 2.2% to Rs809.15. Reliance Industries, India’s top listed firm with the most weight in the main index, fell 0.9% to Rs1,054.20.

The energy major should post a second straight increase in quarterly profit on Friday, lifted by higher gas output from fields off India’s east coast and a nascent recovery in refining margins.

In the broader market, gainers led losers 2 to 1 on a relatively moderate volume of about 442 million shares.

Asian shares on Wednesday mirrored an overnight rise in the United States, with Japan’s Nikkei gaining 1.7%, while MSCI’s measure of other Asian markets rose 0.7%.

At 4:07pm, the pan-European FTSEurofirst 300 index of top shares was down 0.4%.