Indian shares rose for the second week and closed 0.3 percent higher on Friday, propped up by gains in Tata Consultancy Services as brokerages cheered the top outsourcer's forecast-beating quarterly earnings by raising their target prices.
J.P. Morgan, BNP Paribas, Macquarie, HSBC, RBS Equities and Kotak raised their target price for TCS, indicating their optimism about the outlook despite woes in Europe, a key market. TCS rose as much as 6.9 percent to 838.30 rupees, and was the top gainer in the main index.
"We believe TCS's broadbased 8-plus percent volume growth, similar to Infosys, indicates strong demand momentum," RBS analysts Pankaj Kapoor and Srinivas Seshadri said in a note. The 30-share BSE index rose 0.26 percent or 46.36 points to 17,955,92, taking gains for the week to 0.7 percent. Seventeen of its components closed in the green. India's benchmark index is up 2.8 percent so far this year, helped by foreign fund inflows of $8.4 billion. It had witnessed a spectacular 81 percent rally in 2009, after foreigners pumped in a record $17.5 billion.
After market hours on Thursday, TCS said its June-quarter net profit rose 21 percent to 18.4 billion rupees ($395 million) from 15.2 billion rupees a year ago, under US accounting standards. TCS closed 6.2 percent higher, its highest single-day gain in a year.
The cheer for the sector leader also pulled up rivals. Infosys Technologies, which had reported a rare drop in quarterly net profit on Tuesday, gained 0.7 percent while third-ranked Wipro, which details its earnings next week, rose 0.1 percent. Key companies' earnings, including HDFC Bank and Wipro, will set the market's direction next week.
Lenders closed mixed. While inflationary concerns weighed on the outlook for interest rates, there were expectations built that robust economic growh will fuel loan demand.
Top private lender ICICI Bank rose 2.3 percent while its smaller rival HDFC Bank dropped 1.2 percent. Leading lender State Bank of India firmed 0.1 percent. Advancing shares led declining ones in a ratio of 1.2:1 in the broader market in a volume of 355 million shares. The 50-share NSE index rose 0.3 percent to 5,393.90 points.
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