Indian stocks gained after earnings at some of the country’s biggest companies exceeded analysts’ estimates, improving the outlook for corporate profitability.
The BSE India Sensitive Index, or Sensex, rose 0.6 percent to 18,793.44 at the close. Tata Consultancy Services Ltd., the largest software maker, increased the most in almost two months after second-quarter net income jumped 44 percent, exceeding analysts’ forecasts. Larsen & Toubro Ltd. rallied 2.3 percent to a 25-month high after reporting a better-than-estimated 43 percent increase in profit.
Profit at only one out of the eight Sensex firms that have reported earnings for the September quarter has trailed analyst forecasts, compared with 40 percent in the June quarter and 30 percent in March, data compiled by Bloomberg show. The Sensex has surged 22 percent this year as foreigners bought a net $18 billion of domestic shares, the most among 10 Asian markets tracked by Bloomberg, excluding China.
“We’re in the middle of a very busy earnings season not just in India, but globally, and investors’ focus will shift to fundamentals and earnings,” Punita Kumar-Sinha, managing partner at Pacific Paradigm Advisors, said in an interview to Bloomberg TV India today. “Some of the initiatives that have taken place in India should hopefully start reflecting in the earnings going forward.”
The Sensex climbed 7.7 percent last month, the most since January, as Prime Minister Manmohan Singh opened retailing and airlines to foreigners, pared fuel subsidies and lowered a tax on companies’ overseas borrowings in a wave of policy-making that ended a two-year legislative gridlock.
The 30-stock Indian gauge trades at 14.9 times estimated earnings, compared with a multiple of 11.6 times for the MSCI Emerging Markets Index, data compiled by Bloomberg show.
Tata Consultancy climbed 2.3 percent to 1,318.90 rupees, the steepest gain since Aug. 28. Clients outsourced more technology work, boosting net income 44 percent to 35.1 billion rupees ($653 million), the company said Oct. 19 after markets closed. That beat the 33.8 billion-rupee median of 36 analysts’ estimates compiled by Bloomberg.
Larsen, the biggest Indian builder of power networks and airports, rallied 2.3 percent to 1,671 rupees, its highest close since Sept. 9 last year. Net income rose to 11.4 billion rupees in the September quarter, the Mumbai-based company said in a filing today. That exceeded the 8.8 billion-rupee median of 27 analyst estimates compiled by Bloomberg.
Bajaj Auto Ltd., the second-biggest motorcycle maker, rose 0.8 percent to 1,786.4 rupees, a three-week high. It reported a profit of 7.4 billion rupees over the weekend, compared with a median estimate of 7.28 billion rupees in a Bloomberg survey. Housing Development Finance Corp., the largest mortgage lender, slid 0.3 percent after profit matched estimates.
ICICI Bank Ltd., the largest Indian private lender by assets, gained 1.7 percent to 1,075.60 rupees, and smaller rival HDFC Bank Ltd. jumped 1.7 percent to a record 639 rupees.
Kingfisher Airlines Ltd., which isn’t a Sensex member, slumped 4.8 percent to 10.85 rupees in a third day of losses as the government suspended the cash-strapped carrier’s operating license. The suspension will remain in effect until the airline submits a “concrete and reliable” revival plan to the Director General of Civil Aviation, the industry regulator, the Civil Aviation Ministry said in an Oct. 20 statement.
The S&P CNX Nifty Index of 50 companies rose 0.6 percent to 5,717.15. Its October futures traded at 5,721.45.
India VIX, which measures the cost of protection against losses in the Nifty, tumbled 10 percent to 13.04, a record low. The BSE-200 Index added 0.5 percent to 2,318.41. The National Stock Exchange and the BSE traded 894 million shares on Oct. 19, compared with a 12-month daily average of 910 million.