India’s Sensex Climbs to 6-Week High as Infosys Beats Estimates

Indian stocks rallied to a six-week high, led by software makers after Infosys Ltd.’s earnings rose and its sales forecast in dollar terms beat analyst estimates.

The S&P BSE Sensex soared 1.4 percent to 19,958.47 at the close in Mumbai. Infosys, the second-largest software exporter, climbed the most in six months. Rivals Tata Consultancy Services Ltd. and Wipro Ltd. jumped about 3 percent each. Sun Pharmaceutical Industries Ltd. climbed to a record

Infosys, kicking off the reporting season for the quarter ended June, said it expects dollar revenue to rise 6 percent to 10 percent in the year to March 31, unchanged from its forecast in April. Ten analysts in a Bloomberg News survey expected the company to cut the top end of its guidance range to 7.5 percent. Infosys sank the most in a decade on April 12 after it said annual sales will increase slower than analysts estimated. The Sensex climbed 2.4 percent this week after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will continue to need stimulus.

“Infosys earnings will prompt more buying in the software sector as it has improved the outlook” for the industry, K.K. Mital, a portfolio manager at Globe Capital Market Ltd., said by telephone from New Delhi. “The Fed’s comments have eased concerns of withdrawals. Global funds will resume buying local shares and the rupee’s depreciating trend will be checked.”

The rupee completed its first weekly gain since May after the Fed and Bank of Japan indicated they will maintain stimulus and Indian regulators took steps to curb speculation. Foreign funds pulled $1.8 billion from local shares in June, the most since August 2011, and a record $5.4 billion from bonds. That fueled the rupee’s drop to an unprecedented 61.2125 per dollar on July 8. The currency strengthened 0.1 percent today.

Open Interest

Infosys soared 11 percent to 2,804.2 rupees, extending this week’s advance to 14 percent, the sharpest gain on the Sensex. Outstanding contracts in the company’s futures jumped 36 percent to 31,613, the most on the National Stock Exchange.

Tata Consultancy Services added 2.9 percent to 1,609.85 rupees. Wipro gained 3.2 percent to 375.6 rupees. The S&P BSE Infotech Index surged 6.5 percent to its highest since April 3.

Tata Motors rose 2.7 percent to 292.5 rupees. Drugmaker Dr Reddy’s Laboratories Ltd. climbed 3 percent to 2,349.45 rupees. Reliance Industries Ltd., owner of the world’s largest refining complex, rose 2.3 percent to 889.95 rupees.

Sun Pharmaceutical, the biggest drugmaker by value, gained 1.2 percent to 1,108.7 rupees. Engineering firm Larsen & Toubro Ltd. rallied 3.2 percent to 995.5 rupees. HDFC Bank Ltd., the biggest lender by value, increased 1.8 percent to 695.75 rupees.

The Sensex has gained 2.7 percent this year and trades at 13.4 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.9 times. The CNX Nifty Index on the National Stock Exchange of India added 1.3 percent to 6,009, its highest close since May 30.

Sales Growth

Indian companies’ sales growth is declining in an economy that expanded last quarter at near its slowest pace since 2009. Revenue for the 30 Sensex companies may have risen 3.8 percent from a year earlier in the three months ended June, the least in 16 quarters, according to Deutsche Bank AG.

Industrial output unexpectedly contracted in May, adding pressure for more government measures to revive the economy. Production at factories, utilities and mines fell 1.6 percent from a year earlier after a revised 1.9 percent climb in April, official data showed after the market closed. Another report showed consumer-price inflation accelerated to 9.87 percent last month, staying close to 10 percent for more than a year.

Before it's here, it's on the Bloomberg Terminal.