Markets advance 2% in afternoon trades

The markets were up almost 2% in the afternoon trades buoyed by technology shares, shrugging off subdued industrial output data and weak opening in Europe. The Nifty was trading at 5,060, up 60 points and Sensex was at 16,825, up 280 points.

The Nifty index opened on an upbeat note after Infosys results were slightly better than expected. The index crossed 5,050 and succumbed to profit booking following IIP data at 4.1% for August against market expectation of 5%. Buying in IT and banking shares and recovery in European markets helped the Nifty scale a high of 5,074 in later afternoon.

Markets in Asia rebounded from lows buoyed by Chinese banks, offsetting weak results from Alumunium Giant Alcoa and concerns in Euro-zone. The Hang Seng index closed up 0.2%, the Shanghai Composite gained 3% and the Japan’s benchmark Nikkei average ended down 0.4%.

European markets were reversed trend after slipping in early trade after Slovakian parliament rejected the expansion of the European rescue fund. The CAC and FTSE were up 0.2% and 0.6% each, while the DAX was up over 1%.

Back in India, Infosys kicked off the second quarter earnings season. Net profit after tax was reported at Rs 1,906 crore against Rs 1,702 crore in the previous quarter, up 9.7% y-o-y.  Reuter’s poll expected consolidated net profit at Rs 1,891 crore. Revenues grew by 16.6% to Rs 8,099 crore.

In its FY12 guidance the company expects a growth of 17.1-19.1% as against earlier 18-20%. While the numbers were slightly better than expect, global uncertainties may affect revenue growth going forward. “The global macro-economic environment is still uncertain. It should be a concern for the IT industry,” said SD Shibulal, CEO and Managing Director of Infosys. Brokerage Prabhudas Lilladher retained buy rating on Infosys on back upward revision on Rupee guidance from Rs 130 to Rs 143-145 and marginal downward revision in dollar revenue growth.

Major gainers on the Sensex were Infosys, up 6% at Rs 2,674; TCS and Wipro were up over 3% each. The front line IT shares contributed around 120 points on the Sensex. Prominent losers were Tata Power, Tata Motors and Coal India, down between 1-3% each.

Auto share were leading the losses. Major losers included Mahindra & Mahindra, Bajaj Auto and Hero Motor Corp, down 0.2-1% each.

Market breadth was positive – 1419 stocks advanced for 1158 shares which declined.