Sensex edges up to two-year high on oil, earnings

The BSE Sensex edged higher on Friday to touch two-year high, posting its strongest weekly performance since the end of November, as oil companies such as ONGC rose on hopes a proposed change in the government's pricing formula would boost gas prices.

Software services exporters such as Tata Consultancy Services also rose on expectations upcoming October-December earnings results would beat expectations and that the sector would guide for an improved outlook in 2013.

Infosys will kick off earnings on January 11, at a time when results are gaining particular relevance given some analysts worry about potential complacency after strong gains in 2012 have continued into the new year.

India VIX, also considered by some investors as a fear gauge, is just 2.5% away from its all-time lowest close.

"We have already seen advance tax numbers, so in the near term one has to see how the earnings season pans out," Kaushik Dani, fund manager at Peerless Mutual Fund, said.

"One has to remain stock specific on how the numbers shape up for the quarter," Dani said.

The benchmark BSE index rose 0.1%, or 19.30 points, to end at 19,784.08, marking a fourth consecutive session of gains.

The index rose 1.74% for the week, its strongest weekly performance since the end of November.

The broader NSE index rose 0.11%, or 6.65 points, to end at 6,016.15, closing above the psychologically important 6,000 level for a second day. It rose 1.8% for the week.

Shares in upstream oil and gas companies rallied on hopes that the pricing formula recommended by a government-appointed panel that looked into oil and gas exploration contracts would be approved by the government.

The proposed changes would sharply raise the prices of domestic natural gas, analysts said.

Oil and Natural Gas Corporation shares gained 1.8%, while Oil India rose 2%.

Reliance Industries Ltd rose 0.13%, gaining less than its peers after the market regulator rejected its request to settle a long-pending dispute over the 2007 sale of stock futures in a unit.

State-owned oil companies gained on expectations India could soon announce a potential gradual hike in diesel prices, after a government official last month was quoted in local media saying a proposal was being considered.

Among refiners, Indian Oil Corp rose 3.5%, Hindustan Petroleum Corp gained 5.3% and Bharat Petroleum Corp ended 2.12% higher.

Expectations of better-than-expected quarterly earnings lifted technology stocks.

Tata Consultancy Services Ltd rose 1.45%, while Wipro Ltd ended up 1.5% higher.

Infosys, which kicks off earnings on Friday, rose 0.5%. The company denied a newspaper report it was planning to fire up to 5,000 poorly performing workers was "wrong", although it encourages "chronic underperformers" to leave as part of its routine staff management.

IFCI shares gained 11.4% after the government restructured the board of the project finance provider according to a stock filing, sparking hopes of a turnaround in operations.

However, Tata Steel ended 1.9% lower while Jindal Steel and Power fell 1.8% on profit taking, after gaining on the back of a rise in international metal prices after the end of the US "fiscal cliff" issue.