IT, banking stocks lead rally

A strong beginning to the earnings season, with IT major Infosys raising its revenue guidance for the full year, gains in rupee against the dollar and provisional data showing that foreign funds remained net buyers of Indian stocks on Thursday, 10 October 2013, cheered bulls as the barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit three-week high. Stock prices, however, underwent intraday volatility. The barometer index, the S&P BSE Sensex, was provisionally up 234.24 points or 1.16%, up 139.09 points from the day's low and off 52.54 points from the day's high. The market breadth, indicating the overall health of the market, was positive. The market sentiment was boosted by Gains in European and Asian stocks triggered by hopes that US lawmakers will lift the debt limit and avoid a default aided rally on the domestic bourses.

Banking stocks rose after the Reserve Bank of India (RBI) on Thursday allowed banks to raise funds from global multilateral institutions until November 30 as long as the money raised is for general banking purposes and not for capital enhancement.

IT major Infosys surged after the company raised its revenue guidance for the year ending 31 March 2014 (FY 2014) at the time of announcing Q2 results before trading hours. Many other IT stocks rose after Infosys' upward revision in FY 2014 revenue guidance. TCS and HCL Technologies hit record high. Tech Mahindra hit 52-week high.

Index heavyweight and cigarette maker ITC dropped. Tata Motors edged higher, with the stock extending Thursday's rally triggered by the company's British luxury car unit Jaguar Land Rover (JLR) reporting decent growth in retail sales for September 2013. Coal India dropped. Shares of engineering and construction major L&T surged. Shares of construction firm NCC jumped after the company said that preliminary discussions are taking place between NCC Infrastructure Holdings and Singapore's Sembcorp for investment in NCC Power Projects.

The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Thursday, 10 October 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 614.27 crore on Thursday, 10 October 2013, as per provisional data from the stock exchanges.

In the foreign exchange market, the rupee edged higher against the dollar tracking gains in regional currencies and the domestic equity market. The partially convertible rupee was hovering at 61.09, higher than its close of 61.39/40 on Thursday, 10 October 2013.

As per provisional closing, the S&P BSE Sensex was up 234.24 points or 1.16% to 20,507.15. The index jumped 286.78 points at the day's high of 20,559.69 in early trade, its highest level since 20 September 2013. The index rose 95.15 points at the day's low of 20,368.06 in morning trade.

The CNX Nifty was up 71.45 points or 1.19% to 6,092.40. The index hit a high of 6,107.60 in intraday trade, its highest level since 20 September 2013. The index hit a low of 6,046.40 in intraday trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,334 shares gained and 1,132 shares fell. A total of 162 shares were unchanged.

The total turnover on BSE amounted to Rs 2120 crore, higher than Rs 1902 crore on Thursday, 10 October 2013.

Among the 30-share Sensex pack, 20 stocks gained and rest of them declined.

Index heavyweight and cigarette maker ITC fell 1.7% to Rs 341. The stock hit high of Rs 349.90 and Rs 340.40.

IT major Infosys edged higher in volatile trade after the company raised its revenue growth guidance for the year ending 31 March 2014 (FY 2014) at the time of announcement of Q2 September 2013 results before trading hours. The stock jumped 5.06% to Rs 3,282.30. The stock surged as much as 7.55% at the day's high of Rs 3,360 at the onset of the trading session, also its 52-week high. The stock rose as much as 1.07% at the day's low of Rs 3,157.65 in early trade. On a consolidated basis, Infosys' net profit rose 1.4% to Rs 2407 crore on 15.1% increase in total revenues to Rs 12965 crore in Q2 September 2013 over Q1 June 2013. Infosys has made a provision of Rs 219 crore towards visa related expenses in Q2 September 2013. The results are as per International Financial Reporting Standards (IFRS).

Infosys said it now expects revenue in dollar terms to grow 9% to 10% in the year ending 31 March 2014 (FY 2014). This is an upward revision from its guidance of 6% to 10% which the company had given at the time of announcing Q1 June 2013 results in July this year. Thanks to depreciation of rupee against the dollar, Infosys has also raised its revenue growth guidance in rupee terms for FY 2014. The company now expects 21% to 22% growth in revenue in FY 2014, which is higher than its earlier forecast 13% to 17% growth.

Commenting on the second quarter results, S. D. Shibulal, CEO and Managing Director, Infosys said: "During the quarter we witnessed broad-based volume growth, robust client additions, five large deal wins and increased sales momentum of our big data and cloud offerings. This growth is a result of our focus on execution, which helps our clients achieve their objectives. We will continue with planned investments and initiatives to explore new avenues of growth. We remain watchful of the sustainability of improving global economic fundamentals."

Rajiv Bansal, Chief Financial Officer, Infosys, said: "The global currency market remains volatile with the Indian Rupee depreciating by 11% during the quarter. We have an active hedging program to minimize its impact on our margins. We will continue our focus on optimizing costs and enhancing the efficiency of our operations".

Infosys and its subsidiaries added 68 clients during the quarter. There was a gross addition of 12,168 employees and net addition of 2,964 employees for the quarter by Infosys and its subsidiaries.

Infosys' liquid assets, including cash and cash equivalents, available-for-sale financial assets, and government bonds were Rs 26907 crore as on 30 September 2013, higher than Rs 24078 crore as on 30 June 2013.

Tata Motors gained 3.6% to Rs 385.15, with the stock extending Thursday's 5% rally triggered by the company's British luxury car unit Jaguar Land Rover (JLR) reporting decent growth in retail sales for September 2013. The scrip witnessed high intraday volatility. The stock hit of Rs 389.50, which is record high for the counter. The scrip hit low of Rs 368.40. JLR on Thursday, 10 October 2013, said its retail sales jumped 17% to 43,181 vehicles in September 2013 over September 2012. Sustained sales growth continues for JLR, with increase in retail sales in all major regions, JLR said in statement. Retail sales of the Land Rover brand rose 13% to 34,719 vehicles in September 2013 over September 2012. Sales of the Jaguar brand jumped 35% to 8,462 vehicles in September 2013 over September 2012.

Capital goods pivotals saw divergent trend. L&T advanced 4.5%, with the stock extending intraday gain in late trade. The stock extended recent gains triggered by the company's announcement of winning new orders worth Rs 1605 crore across various business segments. L&T announced the new orders during trading hours on Tuesday, 8 October 2013.

Bhel shed 0.41%.

Shares of construction firm NCC jumped 11.42% to Rs 21.95 after the company said that preliminary discussions are taking place between NCC Infrastructure Holdings and Singapore's Sembcorp for investment in NCC Power Projects. NCC was reacting to media reports that Sembcorp will purchase a majority stake in NCC Power for Rs 500 crore. The terms of investment including structuring will be finalised after the due diligence process and negotiations are completed between the parties, NCC said. NCC Infrastructure Holdings is a wholly owned subsidiary of NCC.

Coal India lost 4.01% to Rs 282.20. As per recent media reports, the government is likely to dilute 5% stake in the company via follow-on public offer in December 2013.

Banking stocks rose across the board after the Reserve Bank of India (RBI) on Thursday allowed banks to raise funds from global multilateral institutions until 30 November 2013 as long as the money raised is for general banking purposes and not for capital enhancement. These borrowings from multilateral bodies will also be eligible for the recently opened forex swap facility. The central bank on Thursday also allowed banks to borrow from entities other than their own branches overseas under existing regulators for borrowing overseas.

Among private bank stocks, HDFC Bank (up 2.56%), Axis Bank (up 3.35%), Yes Bank (up 1.13%), and ICICI Bank (up 5.16%) gained.

Among PSU bank stocks, State Bank of India (SBI) (up 0.8%), Punjab National Bank (up 2.16%), Bank of Baroda (up 4.71%), and Union Bank of India (up 3.37%) advanced.

On the macro front, the government will unveil industrial production data for August 2013 at 17:30 IST today, 11 October 2013. Industrial production growth is seen decelerating to 2.4% in August 2013 from 2.6% in July 2013, as per the median estimate of a poll of economists carried out by Capital Market.

European shares edged higher on Friday, 11 October 2013, on optimism that US lawmakers would reach an agreement on raising the nation's debt limit to avoid a default. Key benchmark indices in France, UK and Germany were up 0.16% to 0.61%.

Asian stocks edged higher on Friday, 11 October 2013, amid hopes US lawmakers will lift the debt limit and avoid a default. Key benchmark indices in China, Singapore, Japan, South Korea, Hong Kong, Taiwan and Indonesia rose by 0.06% to 1.7%.

China is scheduled to release a series of economic reports over the weekend including September trade data. China's economy may grow about 7% for the foreseeable future as policy makers rein in house-price gains and local government debt, Deputy Central Bank Governor Yi Gang said on Thursday.

Trading in US index futures indicated that the Dow could gain 22 points at the opening bell on Friday, 11 October 2013. US stocks jumped on Thursday, with the Dow Jones Industrial Average notching its best one-day point gain since December 2011, after House Republican leaders proposed a temporary extension of the nation's debt ceiling.

House Republican leaders and President Barack Obama ended a roughly 90-minute meeting at the White House Thursday night without a deal to re-open the government or raise the US debt limit, but agreed to keep talking. House Speaker John Boehner's office said that Republicans explained their proposal for a six-week extension in the debt limit, and to begin immediate talks on re-opening the government. The US government shutdown entered its 11th day on Friday and the Treasury Department's Oct. 17 deadline for raising the debt ceiling is rapidly approaching.

Claims for US jobless benefits jumped last week to the highest level in six months, a Labor Department report showed on Thursday.

The Federal Open Market Committee (FOMC) holds a two-day policy meeting on 29-30 October 2013. The lack of data may make it harder for the Federal Reserve to assess the economy's strength as policy makers mull the timing of reductions in bond buying. Government data from payrolls to retail sales will be delayed as long as the shutdown continues. On 18 September 2013, the Fed surprised economists and investors with its decision to delay scaling back its stimulus amid concerns about the strength of the economic recovery.

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