Stellar TCS Q1 numbers fortify benchmarks in early deals

Indian equity indices, extending their northward journey, have made a positive start with frontline gauges surpassing their crucial 6,050 (Nifty) and 20,200 (Sensex) bastions buoyed by firm cues from US markets coupled with positive Q1 results from Tata Consultancy Services (TCS). On the consolidated basis, IT major reported a rise of 15.46% in its net profit at Rs 3830.64 crore in Q1 as compared to Rs 3317.68 crore in a year ago period.  Total income has increased by 21.19% at Rs 18245.56 crore for quarter under review as compared to Rs 15054.97 crore for the same quarter in the previous year.

Supportive cues from US markets too provided the much needed support to local markets in initial trade. Investors’ morale got buttressed after the US initial jobless claim fell sharply in last week, index of regional manufacturing activity in Philadelphia unexpectedly jumped in July. Though, Asian markets were trading mixed at this point of time with some of the indices trading into the red terrain led by selling in tech shares after Google and Microsoft reported lower than expected earnings.

Back home, gains remained capped as international credit rating agency Moody’s has warned that the rupee fall may constrain country’s sovereign credit rating, as it will exacerbate inflationary and fiscal pressures. Meanwhile, RBI Governor D Subbarao has said that the currency’s exchange rate will largely be market-determined but central bank would intervene to prevent disruptions to macro-economic stability.

On the sectoral front, software witnessed the maximum gain in trade followed by technology and auto, while consumer durables, power and capital goods remained the top losers on the BSE sectoral space. The broader indices too were trading in-line with benchmarks, while the market breadth on the BSE was positive; there were 813 shares on the gaining side against 446 shares on the losing side while 48 shares remain unchanged.

The BSE Sensex opened at 20213.45; about 85 points higher compared to its previous closing of 20128.41, and has touched a high and a low of 20236.14 and 20150.52 respectively.

The index is currently trading at 20225.44, up by 97.03 points or 0.48%. There were 15 stocks advancing against 15 declines on the index.

The overall market breadth has made a strong start with 64.31% stocks advancing against 32.23% declines. The broader indices were trading in green; the BSE Mid cap down by 0.44% and Small cap indices up by 0.49%. 

The top gaining sectoral indices on the BSE were, IT up by 3.04%, Teck up by 2.25%, Auto up by 1.17%, Metal up by 0.70% and Oil & Gas up by 0.47%, while Consumer Durables down by 0.94%, Power down by 0.74%, Capital Goods down by 0.61%, Bankex down by 0.56% and Realty down by 0.35% were the top losers on the sectoral index.

The top gainers on the Sensex were TCS up by 5.12%, Tata Motors up by 2.42%, Mahindra & Mahindra up by 2.12%, Infosys up by 1.91% and Wipro up by 1.66%.  On the flip side, BHEL was down by 3.23%,  NTPC was down by 1.57%, Bajaj Auto was down by 1.04%, Tata Power was down by 0.97% and Sun Pharma was down by 0.90% were the top losers on the Sensex.

Meanwhile, Chief Economic Advisor Raghuram Rajan has called for zero regulation, saying that external factors and the delayed allocation of natural resources and environmental clearances have played a significant role in the slowdown of growth. He also said that undue volatility in the rupee is not desirable.

Rajan highlighted that the Reserve Bank of India’s (RBI) measures were not an indication of a tightening in the interest rate cycle which has increased the cost of funds for banks and did not signal monetary tightening, a short-term move with an intention to curb rupee volatility. Stating further he said that he saw no comparison between sliding macroeconomic parameters and global financial crisis, even as the RBI opened a three-day repo borrowing window for mutual funds for the first time after the meltdown of 2008-09.

He also stated that as policy rates were left unchanged, the RBI steps cannot be called a monetary tightening measure. “It did not change the policy rate, not changed the repo rate. I think the message that the Reserve Bank was trying to send out that it is not the beginning of a process of monetary tightening.”  He also said that if the inflation comes under control, the RBI may reduce the rates.

Earlier, after lifting short term rates to drain out liquidity, the RBI, as a contingency measure, to enable banks to fulfill Mutual Funds liquidity needs, decided to conduct a special 3-day repo borrowing window, under which banks can borrow Rs 25,000 crore at an interest rate of 10.25%. This facility has been made available for a temporary period until further notice.

The CNX Nifty opened at 6,057.20; about 19 points higher as compared to its previous closing of 6,038.05, and has touched a high and a low of 6,066.85 and 6,035.60 respectively.

The index is currently trading at 6,055.60, up by 17.55 points or 0.29%. There were 20 stocks advancing against 29 declines and one stock remains unchanged on the index.

The top gainers of the Nifty were TCS up by 5.17%, HCL Tech up by 4.08%, Tata Motors up by 2.65%, M&M up by 2.31% and Cairn up by 2.04%.

On the flip side, BHEL down by 3.48%, Kotak Bank down by 2.26%, NTPC down by 1.77%, Ambuja Cements down by 1.70% and DLF down by 1.40% were the major losers on the index.

The Asian equity indices were trading mixed; Shanghai Composite rose 4.31 points or 0.21% to 2,027.71, Hang Seng increased 32.17 points or 0.15% to 21,377.39, Jakarta Composite jumped 12.51 points or 0.27% to 4,732.95, KLSE Composite added 7.11 points or 0.40% to 1,798.65 and Seoul Composite was up by 0.07 points or 0.01% to 1,875.55.

On the flip side, Nikkei 225 declined 241.18 points or 1.63% to 14,567.32, Straits Times dipped 4.90 points or 0.15% to 3,213.30 and Taiwan Weighted was down by 118.51 points or 1.45% to 8,076.37.