Tata Consultancy Climbs to Record, Driving India's Sensex to 30-Month High
India’s benchmark stock index rose to the highest in 2 1/2 years. Technology shares gained after Cognizant Technology Solutions Corp. posted earnings that beat estimates, buoying optimism that demand is recovering.
Tata Consultancy Services Ltd., the nation’s largest software services provider, climbed to a record, while smaller rival Infosys Technologies Ltd. advanced the most in seven weeks. Cognizant’s profit and outlook buoyed optimism that demand for computer services is reviving in the U.S., where the two Indian companies get more than half of their sales.
“The business momentum for technology companies remains strong,” said Vaibhav Sanghavi, a fund manager at Ambit Capital Ltd. in Mumbai who doesn’t disclose his holdings. “Cognizant’s results have boosted the outlook for global IT companies.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 102.61, or 0.6 percent, to 18,217.44, its highest level since February 2008. The S&P CNX Nifty Index on the National Stock Exchange climbed 0.5 percent to 5,467.85. The BSE 200 Index gained 0.3 percent to 2,319.40.
Infosys advanced 3.2 percent to 2,874.5 rupees, its best performance since June 14. Tata Consultancy jumped 4.4 percent to 868.8 rupees, its highest level since the shares started trading in August 2004. Cognizant, based in Teaneck, New Jersey, raised its 2010 profit forecast, citing revived spending by clients.
Wipro Ltd., the third-biggest, soared 4.1 percent to 428.8 rupees, its best close since April 16. India’s largest software companies get more than three-fourths of their sales abroad.
Punj Lloyd Ltd. sank 5.5 percent to 121 rupees, its lowest close since May 31. The engineering company posted a first- quarter loss of 306 million rupees ($6.62 million) from profit of 1.27 billion rupees a year earlier. The result follows a fourth-quarter shortfall of 3 billion rupees.
Indian stocks may be headed for a period of “consolidation” after a recent rally, Nomura Holdings Inc. said. Investors should move to a “tactical neutral” on India even though the 12-month outlook for the country’s equities remains positive, Nomura analysts led by Prabhat Awasthi wrote in a report today.
The Nomura analysts said on May 27 they were becoming “more bullish” on Indian stocks as the nation’s economic outlook improves and after valuations fell. The Sensex has climbed 13 percent from a recent low set on May 25.
The gains in share prices, along with “weak” upgrades in analysts’ earnings forecasts, mean valuations are now “less attractive,” according to the Nomura analysts. The Sensex is valued at 17.1 times estimated earnings, having climbed from this year’s low of 15.8 times at the end of May, according to data compiled by Bloomberg.
Overseas funds bought a net 8.64 billion rupees of Indian equities Aug. 2, the 20th straight day that purchases have exceeded sales, raising total investments in the stocks this year to 496 billion rupees, according to the nation’s market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
The following were among the most active on the exchange:
Garden Silk Mills Ltd. (GRDN IN) plunged 8.2 percent to 79.3 rupees, its biggest decline since June 2009. The textile company’s profit in the three months ended June 30 tumbled 70 percent from a year earlier.
Reliance Communications Ltd. (RCOM IN) rose 1.6 percent to 176.65 rupees, reversing eight days of losses. India’s second- largest mobile phone operator and Universal Music Group agreed to offer music services on 3G phones in the South Asian nation, Mahesh Prasad, president of the Indian company, told reporters in Mumbai today.
Scooters India Ltd. (SCTR IN) soared 4.9 percent to 26.55 rupees. India plans to sell a 74 percent stake in the state- owned company to an automobile manufacturer, the Hindu Business Line reported, citing government officials it didn’t identify. Managing Director Ajay Kumar couldn’t immediately be reached at his office telephone for comment on the report.
VIP Industries Ltd. (VIP IN) surged 13 percent to 488.85 rupees, its highest close since at least January 1991. India’s biggest luggage maker is planning to buy a European rival this financial year, and also to form ventures to manufacture soft luggage and boost sales, Chairman Dilip Piramal said.