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Business News/ Market / Stock-market-news/  Sensex ends 3-day drop as lenders, car makers rally
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Sensex ends 3-day drop as lenders, car makers rally

Tata Motors soars most in five months; ICICI Bank advances to its highest level since November 2010; TCS jumps

The Sensex has risen 6.9% so far in 2014 and trades at 14.3 times projected 12-month profits, in line with the average multiple over the past five years. Photo: Hindustan Times Premium
The Sensex has risen 6.9% so far in 2014 and trades at 14.3 times projected 12-month profits, in line with the average multiple over the past five years. Photo: Hindustan Times

Mumbai: India’s benchmark stock index, the S&P BSE Sensex, rallied for the first time in four days led by shares of lenders and auto makers.

Tata Motors Ltd, the owner of Jaguar Land Rover, soared the most in five months. ICICI Bank Ltd, the country’s second-biggest lender, advanced to its highest level since November 2010. Tata Consultancy Services Ltd (TCS), India’s largest software exporter, led an advance among peers after profit in the last quarter rose 51%.

The S&P BSE Sensex jumped 1.6% to 22,628.84 at the close in Mumbai, erasing the weekly loss.

Indian markets will remain closed on Friday for the Good Friday holiday.

The gauge fell for three consecutive days after climbing to a record on 10 April.

“The market is continuing its run after some profit booking," V.K. Vijayakumar, an investment strategist at Geojit BNP Paribas Financial Services Ltd in Kerala, said in a phone interview on Thursday. “Some investors had gone short, and now may have been forced to cover. Thus we saw such a sharp bounce-back." He expects indexes to rally at least 10% if a strong government comes to power after election results are announced 16 May.

The Sensex is the best performer among the largest emerging markets this year on expectations a victory by the opposition Bharatiya Janata Party will produce a government with a mandate to spur economic growth. Overseas investors have bought a net $4.8 billion of local shares this year, the most in Asia, data compiled by Bloomberg show.

Elections, inflation

Several opinion polls have projected the coalition led by the BJP will win the general election for the 543-seat lower house of India’s Parliament. For the first time, a poll earlier this week found that the coalition may win an outright majority.

India’s elections, the world’s biggest-ever exercise in democracy, began on 7 April and will end on 12 May after nine phases of voting. Counting will take place on 16 May.

Investors may have been prompted to sell shares over the past three days after data showed inflation accelerated and factory output declined, according to CNI Research Ltd.

India’s Wholesale-Price Index rose 5.7% in March, the most in three months, official figures released 15 April showed. Consumer prices climbed 8.31% in March from a year earlier, government data showed. Industrial production contracted 1.9% in February from a year earlier, the biggest slide since May, separate data showed on 11 April.

Reserve Bank of India (RBI) governor Raghuram Rajan has raised the benchmark interest rate 75 basis points since taking charge in September to curb price rises. The next policy review is due 3 June.

Tata Motors, ICICI Bank

Tata Motors rallied 4.2%, the most since 14 November. Mahindra and Mahindra Ltd (M&M), India’s largest maker of sport-utility vehicles and tractors, rose 2.26%, ending a four-day decline.

ICICI Bank added 3.3% to its highest level since 5 November 2010. State Bank of India (SBI), the nation’s biggest lender, increased 3%, the most since 9 April.

TCS gained 1.02%. The company reported after markets closed Wednesday that net income jumped 51% in the three months ended 31 March.

Infosys Ltd, the second-biggest software services exporter, forecast on 15 April full- year sales growth that beat analysts estimates.

Infosys gained 1.1%, while Wipro added 2.4%.

TCS, Wipro

TCS profit rose to 5,300 crore, compared with the 5,240 crore median estimate of 39 analysts surveyed by Bloomberg. The company predicts growth will be stronger this year as customers in the US and Europe, as well as the Asia Pacific region, outsource more work.

Wipro, the country’s third-largest software services company by market capitalization, reported after the close of trading on Thursday that profit rose 29% to 2,230 crore in the last quarter, beating estimates of 2,100 crore.

“We are in a massive bull run for the next four years," said B.P. Singh, chief investment officer for equities at Pramerica Asset Managers Pvt. Ltd. Higher corporate profits are driving the rally, he said.

The Sensex has risen 6.9% so far in 2014 and trades at 14.3 times projected 12-month profits, in line with the average multiple over the past five years. The MSCI Emerging Markets Index has gained 0.3% in 2014 and is valued at 10.5 times.

Overseas investors sold a net $15.4 million of Indian shares on April 15, a second day of sales and the first consecutive outflow since February. Bloomberg

Santanu Chakraborty contributed to this story.

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Published: 17 Apr 2014, 09:52 AM IST
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