Shares up 0.5%; IT companies lead

Shares up 0.5%; IT companies lead

Mumbai: Shares were trading 0.5% higher on Tuesday, with software outsourcing firms leading the gains, as Asian markets bounced back from early losses and as the revival of monsoon boosted sentiment.

Software majors rose on expectations of good volume growth at its June quarter results, to be unveiled later this month.

“We expect the big three to report strong 5.1% to 6.5% surge in volumes quarter-on-quarter," brokerage Edelweiss said in a note, referring to Tata Consultancy Services, Infosys Technologies and Wipro.

By 11:10 a.m. (0540 GMT), the 30-share BSE Index was trading up 0.52% at 17,532.65 points, with 25 of its components gaining.

A revival of June-September monsoon rains, the main source of water for India’s summer-sown crops, also boosted sentiment.

Monsoon rains advanced into its key grain-producing states of Punjab and Haryana, narrowing the shortfall since 1 to June to 13% from 16% earlier.

“Recovery in rainfall is a key positive. Monsoon and June quarter earnings will be closely watched for further cues," said Neeraj Dewan, director of Quantum Securities.

Edelweiss expects June-quarter earnings growth for Sensex to come at 6.1% on a year-on-year basis.

Foreign funds have poured in $6.8 billion so far this year after pumping in a record $17.5 billion in 2009, which had fuelled a rally of 81%.

Top IT firm TCS was up 1.9% while rivals Infosys and Wipro rose 0.9% and 1.4% respectively.

Energy giant Reliance Industries, which has the highest weight on the main index, climbed 0.5% to Rs1,073.60.

Lenders shrugged off a hawkish interest-rate outlook and advanced on hopes that a strong economic growth would boost demand for loans.

A Reuters poll forecast the central bank is likely to raise interest rates again in its quarterly review on 27 July, topping up its last Friday’s quarter-point rate hike.

Top lender State Bank of India was up 0.8% while leading private-sector rivals ICICI Bank and HDFC Bank climbed 0.7% and 0.6% respectively.

In the broader market, gainers led losers in a ratio of 1.7:1 in a volume of 147 million shares.

The 50-share NSE index was up 0.5% at 5,263.90 points.