Sensex ends flat after hitting 2-month high

Capital goods shares slump; BHEL, L&T tumble by over 7%

The BSE Sensex rose slightly on Monday after hitting its highest in two months, led by gains in stocks such as HDFC on value-buying, but Larsen & Toubro slumped after posting disappointing earnings. The benchmark BSE Sensex rose 0.05 per cent, or 9.27 points, to end at 20,159.12, gaining for a fourth consecutive session. It rose to 20,264.90 in intra-day trading, its highest level since May 21. The broader Nifty rose 0.04 per cent, or 2.60 points, to end at 6,031.80.

Housing Development Finance Corp Ltd (HDFC.NS: Quote, Profile, Research) gained 3.4 percent on value-buying after falling 5.7 percent last week.

Hero MotoCorp Ltd (HROM.NS: Quote, Profile, Research) rose 1 percent a day ahead of its June-quarter earnings.

Bajaj Auto Ltd (BAJA.NS: Quote, Profile, Research), India's second-largest motorcycle maker, gained 1 percent, rising for a second day as its June-quarter operating margins, after adjusting for mark-to-market loss, beat estimates at 20.4 percent on Friday.

Biocon Ltd (BION.NS: Quote, Profile, Research) rose 1.4 percent after Morgan Stanley upgraded the stock to "overweight" from "equal-weight" and raised its target price to 392 rupees from 283 rupees, citing improving base business, progress in the bio-similar platform and inexpensive valuations.

However, Larsen & Toubro Ltd's (L&T) (LART.NS: Quote, Profile, Research) shares fell 7.4 percent, marking their biggest daily fall in four years, after the company said earnings slumped 12.5 percent in the June quarter from a year earlier, missing consensus estimates by a wide margin.

L&T's results also hit rivals such as Bharat Heavy Electricals Ltd (BHEL.NS: Quote, Profile, Research) which ended 7.1 percent lower.

Reliance Industries Ltd (RELI.NS: Quote, Profile, Research) fell 1.6 percent even after reporting market-beating earnings late on Friday, as other income, mainly from treasury-related gains, accounted for 38 percent of pretax profit for the quarter, according to the company.

Ambuja Cements Ltd (ABUJ.NS: Quote, Profile, Research) slumped 4.7 percent after Credit Suisse downgraded the stock to "neutral" from "outperform", while maintaining its target price at 205 rupees.

The investment bank said the stock is trading at its peak multiple and is already pricing in margin recovery in 2014 and part of the potential merger synergies with ACC Ltd (ACC.NS: Quote, Profile, Research).