Sensex gains around 155 points; defensive stocks lead

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex rose nearly 1 percent on Monday with defensive stocks such as ITC rising on HSBC's upgrade, while Sun Pharma surged after its adjusted June-quarter profit beat estimates.

Investors remained cautious as the RBI's latest measures to drain cash via weekly cash management bill auctions failed to prop up the rupee much, with the currency remaining at near record lows.

The rupee erased earlier gains even after the finance minister announced a slew of measures to narrow the current account deficit, as dealers cited the proposals lacked specifics.

Markets have been on a losing spree for three consecutive weeks with the BSE Sensex falling 6.75 percent as of Thursday's close, as the rupee remained near record lows even after the liquidity measures taken by the RBI, while several companies reported lower-than-expected earnings.

 

"So far the government measures have not had any impact and further steps are needed to either curtail the current account deficit or finance it, and thereby stem the depreciation of the rupee." said Dipen Shah, head of private client group research at Kotak Securities.

The Sensex rose 0.84 percent, or 157.64 points, to end at 18,946.98, gaining for a second consecutive session.

The Nifty also gained 0.84 percent, or 46.75 points, to end at 5,612.40, closing above the psychologically important 5,600 level.

ITC gained 3.2 percent after HSBC upgraded the stock to "overweight" from "neutral", while maintaining its target price of 400 rupees, citing prospects of earnings growth "resilience.

Drugmakers climbed after reporting strong quarterly results. Sun Pharmaceutical Industries Ltd shares rose 7.1 percent after April-June earnings were seen as positive after factoring out a provisioning charge to settle a patent suit.

Cipla gained 1.5 percent after its April-June net profit rose 18.5 percent to 4.75 billion rupees.

Macquarie upgraded Cipla to "outperform" from "neutral" and raised its target price to 480 rupees from 400, saying the drugmaker's April-June earnings were "significantly above" their estimates.

Aurobindo Pharma surged 12 percent after posting a profit of 186 million rupees for April-June compared with a loss of 1,289 million rupees in the same quarter a year earlier.

Britannia Industries ended 5.9 percent higher after earlier hitting an all-time high of 773 rupees as its July-quarter profit rose 92.53 percent to 894.9 million rupees.

Shriram EPC shares ended 3.2 percent higher after it said company agreed to sell its stake in Sree Jayajothi Cements Ltd to My Home Industries Ltd, owned by Ireland's building materials provider CRH .

However among stocks that fell, State Bank of India, the country's largest lender, fell 3.5 percent after it posted a second consecutive drop in quarterly net profit, missing estimates, on worsening asset quality, higher operating expenses and muted growth in interest income.

The state-run bank posted on Monday a 13.6 percent drop in net profit to 32.41 billion rupees in the fiscal first quarter that ended in June compared with 37.52 billion rupees a year earlier.

Mahindra and Mahindra shares fell 0.3 percent a day ahead of its June-quarter earnings.

(Editing by Anand Basu)