TCS, L&T’s strong Q2 numbers drive benchmarks higher

Key Indian benchmark indices, after dragged down in previous session due to global weakness, resumed their northward journey on Monday by ending the session vivaciously over half a percent, recapturing their crucial 5,700 (Nifty) and 18,750 (Sensex) levels. The markets, after a choppy morning session, remained in fine fettle throughout the day’s trade as investors piled up positions in IT and technology stocks on the back of better than expected performance of the IT bellwether TCS helped the markets to gain strength. TCS, on consolidated basis, posted a rise of 49.25 percent in its net profit at Rs 3434.37 crore for the quarter ended September 30, 2012. The company also managed to beat estimates on the volume and pricing front.

Further, markets extended their bull run in last leg of trade after India’s top construction and engineering company -- L&T -- beat estimates with a 42.45 percent rise in net profit for the July-Sept quarter, helped by a one-time gain and higher revenue booking. The Mumbai-based engineering conglomerate’s net profit rose to Rs 1,137.31 crore during the second quarter of the fiscal year from Rs 798.39 crore a year earlier. Indian rupee, which fell 2 percent in previous two sessions, too aided the sentiments appreciating 29 paise to 53.54 against the US dollar at the time of closing of equity markets.

Moreover, recovery in European counters, after a subdued start, too supported the sentiments on the back of renewed hopes that debt-stricken Spain will soon request a bailout after Prime Minister Mariano Rajoy clinched election victory in his home region of Galicia on Sunday in a result seen as supportive for his austerity drive. Some amount of recovery also witnessed in Asian region as the equity indices settled mixed, after trading in the red for most part of the day’s trade. Earlier, the start was subdued as lingering hopes for the global economy were offset by profit-taking after last week’s healthy gains, while heavy losses on Wall Street added to selling pressure.

Back home, investors also got some confidence after provisional data showed that the foreign institutional investors (FIIs) were net buyers of Indian stocks on October 19, 2012. FIIs bought shares worth a net Rs 80.11 crore, as per provisional data from the stock exchanges. Some amount of support also came in after banking stocks gained on expectations that the Reserve Bank of India (RBI) may cut the cash reserve ratio, or the amount of deposits lenders must keep with the central bank, at its policy review on October 30. However, the gains remain capped as Metal stocks like Sesa Goa, SAIL, Uttam Galva, Sterlite Industries, and Jindal Steel edged lower as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.37% October 19, 2012. PSU stocks were in somber mood ahead of an Inter-Ministerial Group meeting to decide on the appointment of merchant bankers to manage the stake sale of Power Grid Corporation.

The NSE’s 50-share broadly followed index Nifty gained by over thirty points to regain its psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex rose by over one hundred and ten points to finish near its psychological 18,800 mark though, the broader markets end mixed. The market breadth remained in favor of declines as there were 1,405 shares on the gaining side against 1,446 shares on the losing side while 125 shares remain unchanged.

Finally, the BSE Sensex gained 111.13 points or 0.59% to settle at 18,793.44, while the S&P CNX Nifty rose by 32.90 points or 0.58% to end at 5,717.15.

The BSE Sensex touched a high and a low of 18,809.28 and 18,600.88, respectively. The BSE Mid-cap index was down by 0.10% and Small-cap index was up by 0.31%.

TCS up 2.26%, L&T up 2.17%, Bharti Airtel up 1.91%, NTPC up 1.74% and HDFC Bank up 1.73% were the major gainers on the Sensex. On the flip side, Jindal Steel down 1.52%, ITC down 1.24%, Sterlite down 1.15%, Hero MotoCorp down 1.01% and Tata Motors down 0.86% were the major losers on the index.

The top gainers on the BSE sectoral space were Capital Goods (CG) up 1.30%, Health Care (HC) up 1.07%, Bankex up 1.00%, IT up 0.84% and TECk up 0.74%, while FMCG down 0.51%, Consumer Durables (CD) down 0.46%, Auto down 0.18%, Metal down 0.08% and PSU down 0.01% were top losers on the BSE sectoral space.

Meanwhile, sectoral tribunal, the Telecom Disputes Settlement & Appellate Tribunal (TDSAT), ahead of the much awaited roll out of cable TV digitization has allowed Multi-System Operators (MSOs) to charge placement fee, setting aside the restrictions of Telecom Regulatory Authority of India (TRAI) on placement fee, number of channels and carriage fee. Comparing cable with DTH, the tribunal observed that MSOs can charge placement fee from broadcasters for keeping their channels in a particular slot and TRAI’s regulation to curb it was “bad in law”. Cable services in the country’s four metros are slated to go completely digital by November 1.

The TDSAT bench headed by Justice S B Sinha has further said that placement charges, if any, will depend upon the mutual agreement between the broadcasters and the MSO. The direction that the MSOs must set up head-ends having carrying capacity of 500 channels too has been set aside, keeping in view that the market forces play an important and significant role in the matter of carrying capacity of the MSO, hence it should not be regulated.

However, TDSAT has upheld certain broadcast regulatory clauses allowing customers to select a combination of 100 free-to-air channels for basic plan. The tribunal also largely consented with the tariff order and regulation of TRAI and gave a go-ahead to TRAI’s revenue sharing mechanism between the local cable operators and the MSOs.

The S&P CNX Nifty touched a high and a low of 5,721.55 and 5,658.05 respectively.

The top gainers on the Nifty were JP Associates up 2.62%, L&T up 2.27%, TCS up 2.26%, NTPC up 2.10% and Bharti Airtel up 1.93%.

The top losers on the index were Bank of Baroda down 2.06%, Jindal Steel down 1.99%, Hero MotoCorp down 1.67%, ITC down 1.61% and Ambuja Cement down 1.43%.

European markets were trading mixed. France’s CAC 40 up 0.28%, Germany’s DAX down 0.03% and Britain’s FTSE 100 up by 0.07%.

Asian shares closed mixed on Monday on profit booking after last week's healthy gains, which came because of data indicating China's economy will pick up in coming years. Moreover, heavy losses on Wall Street pressurized the markets to an extent. Japan’s Nikkei ended marginally up saddled by widening of trade deficit in September. Japan’s Finance Ministry said exports plummeted 10 percent last month from a year earlier, hurt by financial and debt problems in Europe, and a surge in anti-Japanese sentiment in China. Shanghai Composite went home with green mark ahead of key corporate earnings this week, while Hong Kong's Hang Seng index closed in positive territory. However, Seoul shares ended marginally down, followed by downbeat earnings from U.S. firms and worries over a fragile global economy.