Sensex closes higher; TCS shares spark rally, offset Malaysia Airlines crash risks

Jul 18 2014, 16:58 IST
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Sensex rises 80 pts to close at 25,641.56; gains 617 pts for the week. (PTI) Sensex rises 80 pts to close at 25,641.56; gains 617 pts for the week. (PTI)
SummaryBSE Sensex edged higher on Friday, gaining for a fourth consecutive session...

BSE Sensex edged higher on Friday, gaining for a fourth consecutive session, after Tata Consultancy Services' (TCS) better-than-expected earnings sparked a rally in IT stocks and offset global concerns about the downing of Malaysia Airlines Flight MH17 in Ukraine.

The broader NSE index rose 2.7 percent for the week, recovering some of its 3.8 percent fall last week when investors reacted with disappointment over the lack of major reforms in Prime Minister Narendra Modi's maiden budget on July 10.

Trading is expected to be dominated by corporate earnings in the near term, with investors also expected to pay close attention to global factors after a Malaysian plane was shot down in eastern Ukraine, stoking tensions between Russia and the West.

Foreign investors have been an integral part behind the NSE's 21.6 percent gain so far this year. Overseas investors bought Indian shares worth 19.12 billion rupees ($317.7 million) on Thursday, bringing their total investment in Indian shares so far to $11.45 billion, exchange and regulatory data showed.

"We are into the earnings season and there could be stock-specific moves. Markets would be largely news driven. There are geo-political concerns, but we still believe its a buy-on-dips market for quality stocks," said Jagannadham Thunuguntla, head of research and chief strategist at SMC Global Securities.

The benchmark BSE index ended 0.31 percent higher at 25,641.56. The index gained 2.5 percent this week.

The broader NSE index also gained 0.31 percent to 7,663.90.

Technology shares were leading the gains, with IT index of the NSE ending 1.3 percent higher after TCS' consolidated net profit for the three months to June 30, rose to a stronger-than-expected 50.58 billion rupees ($840.5 million) from 39.87 billion rupees a year earlier.

Shares in TCS gained 2.5 percent, Wipro Ltd ended 1.8 percent and Infosys Ltd added 0.4 percent.

Among other gainers, lenders further extended their winning streak after the central bank on Tuesday exempted long-term bonds raised for the infrastructure and affordable housing sector from reserve requirements.

NSE bank index or bank nifty gained 6.5 percent this week, the best weekly gain in eight, after falling 7.1 percent in the previous week.

IDFC Ltd rose 2.9 percent, ending up 10.3 percent for the week, ICICI Bank Ltd gained 2.1 percent, while Axis Bank Ltd ended 2.1 percent higher.

Shares of Indian non-banking financial companies, which take gold as collateral, surge after the central bank issued draft guidelines for those seeking a license to set up a payments banks or a small bank.

Muthoot Finance Ltd surged 3.6 percent, while Manappuram Finance Ltd ended up 3.1 percent.

Bucking the trend, power equipment makers and energy stocks fell. Bharat Heavy Electricals Ltd ended 1.9 percent lower, while Tata Power Co Ltd ended down 2.5 percent and NTPC Ltd closed 0.5 percent lower.

Dipen Shah, Head- Private Client Group Research, Kotak Securities: The week saw benchmark indices rise by about 3% as concerns on crude price eased. Monsoon also progressed during the week, easing worries on inflation. Quarterly results, especially from IT majors, were above estimates and improved sentiments. With the major event of budget out of the way, the markets will likely continue to focus on issues like monsoons, global economy and quarterly results in the short term. Off-budget action on budget initiatives will sustain the confidence of the markets over the medium term. Markets will also look forward to the rate action from RBI in its next policy. We expect RBI to keep rates unchanged, until inflationary pressures ease significantly.

HIGHLIGHTS

* BSE index gains 0.31 pct; adds 2.5 pct for week

* NSE index ends 0.31 pct higher; gains 2.7 pct for week

* TCS ends 2.5 pct; Wipro gains 1.8 pct

FACTORS TO WATCH

* Yen hands back some gains as Ukraine effect cools

* Oil pushes above $108 on downed airliner,

* Ukraine unrest, Gaza keep pressure on shares, bonds steady

* Foreign institutional investor flows

Sensex at 10-day high, IT pack leads rally on TCS earnings

(PTI) The benchmark Sensex today surged over 80 points to close at 25,641.56, its highest in 10 days, on sustained buying by foreign funds in IT shares after encouraging earnings from TCS.

After opening in the negative zone and slipping further to 25,441.24 on profit-booking and a weak global cues on rising geopolitical tensions, the 30-share Sensex bounced back to close 80.40 points, or 0.31 per cent, higher at 25,641.56 after touching the day's high of 25,713.40.

The gauge has now gained over 634 points in four days. Today's closing is the highest since 26,100.08 (July 7). For the week, it has gained 617.21 points.

"The week saw benchmark indices rise by about 3 per cent as concerns on crude price eased. Monsoon also progressed during the week, easing worries on inflation. Quarterly results, especially from IT majors, were above estimates and improved sentiments," said Dipen Shah, Head- Private Client Group Research, Kotak Securities.

The 50-share Nifty of National Stock Exchange also spurted by 23.45 points, or 0.31 per cent, to close the day at 7,663.90 after shuttling between 7,595.50 and 7,685.00.

Shares of TCS surged 2.58 per cent after analysts said the country's largest software exporter posted better-than-expected earnings in the June quarter.

The IT giant, which is also the country's most valued firm in terms of market valuation, also emerged the top gainer on the Nifty. TCS had yesterday posted a 45 per cent jump in June quarter net profit at Rs 5,568 crore.

Other Sensex gainers were Infosys, Wipro, ICICI Bank, Hero MotoCorp, L&T, Axis Bank,, Tata Steel, HDFC and Cipla.

However, gains were limited as global markets remained under pressure after the downing of a Malaysian airliner at the Ukraine-Russia border, new sanctions on Moscow and unrest in Gaza, brokers said.

Sectorwise, the BSE IT index gained the most by surging 1.43 per cent, followed by Teck index 0.91 per cent, Banking index 0.77 per cent and Capital goods index 0.42 per cent.

Foreign Portfolio Investors bought shares worth Rs 1,912.42 crore yesterday, as per provisional data.

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