Sensex shows revival signs, rises 465 points

Index posts best weekly gain since July 2009.

A wave of optimism across Asian markets on Friday helped Indian equity indices register significant gains. The rally, led by information technology (IT), banking and infrastructure sectors, took the National Stock Exchange Nifty above the psychological mark of 5,600.

The benchmark indices registered their best weekly gain since July 2009. The Bombay Stock Exchange Sensex was up 5.2, or 934 points, this week. According to market experts, the sentiment was lifted by buying from foreign institutional investors (FIIs), who found a large number of front-line stocks attractive after the recent correction. According to the provisional numbers, FIIs were net buyers of Rs 1,446 crore on Friday. They have bought Indian shares worth over Rs 2,000 crore this month.

The Sensex gained 464.90 points, or 2.53 per cent, and closed at 18,815.64. More than 1,700 stocks gained and 1,199 fell. The Nifty closed the day at 5,654.25, up 131.85 points, or 2.39 per cent. Elsewhere in Asia, Hang Seng gained 243 points (1.06 per cent), while the Shanghai Composite and Nikkei rose more than one per cent each.

“The markets were sold off in recent months due to concerns over corporate governance standards, higher inflation (and hence interest rates) and firm crude oil prices,” said Sanjeev Zarbade, vice-president (private client group research), Kotak Securities. Going ahead, we expect the markets to move in line with the global peers, he adds.

The gains were led by the IT sector, which got a shot in the arm from better-than-expected results of Accenture and Oracle. Accenture raised its guidance for the second consecutive quarter. It raised its profit guidance for the full year to 11-14 per cent year-on-year (from 8-11 per cent last quarter). The BSE IT index was the best performer of the day, gaining over four per cent, or 245 points. Infosys Technologies rose 5.23 per cent to Rs 3,162.

TCS and Wipro gained 2.26 per cent and 3.68 per cent, respectively. These three stocks collectively have nearly 90 per cent weight in the IT index. “Improving licence sales by software providers such as SAP and Oracle is a positive leading indicator for Indian IT companies. Increasing polarisation of the software market due to aggressive M&As by companies such as Oracle is resulting in a significant increase in the addressable market of top-tier Indian IT companies,” said Yogesh Aggarwal, analyst, HSBC Securities.

Banks were also in the limelight with State Bank of India gaining 2.18 per cent to Rs 2,709.45.

A recent survey by Reuters showed that business sentiment at Asia’s top companies rose in the first quarter to its highest level in eight quarters, with global economic uncertainty seen as the biggest risk to the positive outlook. Chinese and Indian firms were the most upbeat about their business outlook, with a majority of companies either positive or very positive about the outlook, the survey showed.