Mumbai: Strong start to the second quarter earnings season by Infosys, along with heavy buying sectors like banking, oil & gas and capital goods, saw the Sensex register a powerful rally of over 400 points. The rally was also significant as it was on the backdrop of a weak industrial output data. The buoyancy in global markets too supported our market in last one hour of trade.
The 30-share BSE Sensex soared 421.92 points or 2.55 per cent, to close at 16,958.39, led by gains in 27 stocks. The 50-share NSE Nifty rallied 125.05 points or 2.51 per cent, to end at 5,099.40, after hitting an intra-day high of 5,109.80.
According to portfolio manager PN Vijay, markets are seeing a risk reversal trade in the last 10 days. "If you see the Europe, especially the DAX, it has gone up some 18 per cent and India has hardly gone up 5-7 per cent in the last 10 trading sessions. It means that people are feeling comfortable that at least for now that Greece (debt issue) has been sorted out."
Back home, the star of the day was Infosys after the IT major said its financial year 2011-12 earnings per share would be in the range of Rs 143.02-145.26 led by rupee depreciation, which was a significant improvement from its earlier EPS guidance of Rs 128.20-130.08.
Calling it a 'strong buy' post strong results, Sandip Agarwal, IT analyst with Antique Stock Broking says the company has done extremely well for bringing the improvement in the utilization numbers.
Keeping aside the EPS guidance upgrade, which he says will see an upgradation due to the currency factor, Agarwal says the execution side is a big kick. "Overall, the Infosys results are a good set of number on the operating matrix side and the execution side," he says, adding that the stock remains the top pick followed by rival TCS.
The BSE IT Index closed up over 5 per cent as Infosys gained 7 per cent. TCS and HCL Tech jumped 4 per cent each. Wipro rose 2.5 per cent.
On the economic front, less than expected industrial output data erased some gains on the market but that could not last long. Index of industrial production for the month of August came in at 4.1 per cent as against 3.3 per cent in previous month. CNBC-TV18 poll saw it at 4.82 per cent.
Samiran Chakrabarty, head of research at Standard Chartered Bank says, the slowdown is continuing; that’s my first thought. "Unless inflation softens, RBI is likely to continue with the tightening," he added.
All sectoral indices closed in the green - banks, capital goods, metal and oil & gas were other leading sectors; respective indices moved up 2-3 per cent.
SBI (fell more than 8 per cent in previous few sessions post Moody's downgrade) and JSPL were among top three gainers, surging 6 per cent each on short covering.
Reliance Industries, ITC, ICICI Bank, BHEL, HDFC Bank and L&T gained 2-3.4 per cent.
The broader indices too closed up; the BSE Midcap and Smallcap rose 1 per cent each.
Volume too improved on the beginning of earnings season. Total traded turnover on both exchanges was more than Rs 1.54 lakh crore.
On the global front, the Dow Jones and Nasdaq futures gained 134 points at 11,464 and 27 points at 2,315.50, respectively. European markets too like France's CAC, Germany's DAX and Britain's FTSE rose 0.5-1.5 per cent.
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