BSE Sensex ends flat after hitting two-month high

By Abhishek Vishnoi

MUMBAI (Reuters) - 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 Ltd slumped after posting disappointing earnings.

The slight gains allowed the BSE Sensex to post its fourth consecutive winning session, with sentiment also improved after foreign institutional investors snapped a four-day selling streak by buying 2.52 billion rupees of shares on Friday.

Analysts said a mixed set of earnings, concerns over a reversal in the Reserve Bank of India (RBI) policy and the expiry of July derivatives on Thursday are expected to keep shares volatile for the next few days.

 

Investors are also looking for additional government or RBI measures to stabilise the rupee.

Reuters reported the government is looking to attract dollar inflows through non-resident Indian deposits to support the rupee and has dropped the option of issuing sovereign bond for now, while also considering raising interest rates, according to two senior government officials.

"Some rate hike fears are there but the RBI most likely will not, while earnings have slanted towards being mixed after L&T and Reliance disappointed. Volatility may continue," said G. Chokkalingam, managing director and chief investment officer at Centrum Wealth Management.

The benchmark BSE Sensex rose 0.05 percent, or 9.27 points, to end at 20,159.12, gaining for a fourth consecutive session. It rose to 20,264.90 in intraday trading, its highest level since May 21.

The broader Nifty rose 0.04 percent, or 2.60 points, to end at 6,031.80.

Housing Development Finance Corp Ltd gained 3.4 percent on value-buying after falling 5.7 percent last week.

Hero MotoCorp Ltd rose 1 percent a day ahead of its June-quarter earnings.

Bajaj Auto Ltd , 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 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) 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 which ended 7.1 percent lower.

Reliance Industries Ltd 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 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 .

(Editing by Subhranshu Sahu)