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Mumbai: Indian shares shrugged off a shaky start and extended a winning run to six days yesterday, led by financial stocks, but software firms fell on concerns about US outsourcing deals after Tata Consultancy missed analysts' forecast.
Traders said sentiment for banks and financials were bolstered after private sector Axis Bank reported a 62 per cent jump in quarterly earnings on Monday. The bank ended up 3.4 per cent at Rs910.60, its best close since early March.
However, investors were circumspect ahead of a central bank policy review next week when it could further tighten policy after raising banks' reserve requirements last week to fight inflation running at three-year highs. The benchmark 30-share BSE index ended 0.27 per cent up at 16,783.87, with 18 components gaining. It is 17.2 per cent down so far in 2008.
"In the near term, we believe two key concerns - that of inflation and interest rates staying high, and political uncertainty are likely to persist," UBS said in a research note.
It cut its year-end target for the BSE index to 19,600 from its earlier projection of 22,600.
"At our target, the market would be trading at one-year forward PE of 16 times, compared to the current PE of 16.6 times," UBS said.
Tata Consultancy Services, India's No. 1 software services exporter, fell 10.6 per cent to Rs887.05, its lowest close since April 9, after its March quarter earnings lagged market forecasts as a slowing US economy hurt outsourcing contracts.
Indian software exporters get a bulk of their revenue from banks and financial firms, sectors which have been battered by the turmoil in global financial markets.
Shares in Reliance Industries, India's biggest listed firm, fell 1.3 per cent to Rs2,607.45 on profit-taking after its quarterly profit rose 24 per cent on strong refining margins.
"There were no surprises in Reliance's earnings and that is why the market is not reacting to it positively," said Daljeet Kohli, head of research at Emkay Shares and Stock Brokers.
Top private lender ICICI Bank rose 2.2 per cent to Rs882.40, ahead of its earnings on Saturday, while leading mortgage firm Housing Development Finance Corp rose 3.7 per cent to Rs2,576.75.
HDFC Bank rose nearly three per cent to Rs1,487.65. The sector index gained 1.6 per cent.
In the broader market, 1,561 gainers beat 1,229 losers on total volume of more than 445 million shares. The 50-share NSE index rose 0.24 per cent to 5,049.30.
Kiri Dyes and Chemicals ended at Rs158.55 on its stock market debut. Tractors and construction equipment maker Escorts rose 4.9 per cent to Rs104.
Elsewhere in the region, Colombo's All-Share index closed 0.38 per cent higher at 2,673.01.
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