Nifty reclaims 5400 level and Sensex at 2½ yr closing high

Indian equity benchmarks ended on a positive note Tuesday after pullback in the afternoon taking cues from European peers. Investors took positions in index-heavy weights even as IT bellwether Infosys Technologies announced lower-than-expected first quarter results.

Market opened on a subdued note in line with Asian peers and drifted lower as investors off-loaded Infosys shares. Positive opening of European and buying activity in index heavyweights helped the indices to tide over.

Bombay Stock Exchange’s Sensex ended at 17985.90, up 48.70 points or 0.27 per cent. The index touched a high of 17998.04 and low of 17855.85.

National Stock Exchange’s Nifty closed at 5400.65, up 17.65 points or 0.33 per cent. The broader index hit a high of 5406.20 and low of 5357.85 intraday.

The BSE Midcap and Smallcap indices ended higher by 0.72 per cent.

Amongst the sectoral indices, BSE Realty Index surged 4.03 per cent and BSE Oil&Gas Index moved 1.28 per cent higher. BSE IT Index fell 2.68 per cent and BSE FMCG Index edged 0.29 per cent lower.

IT stocks witnessed profit booking after Infosys reported lower-than-expected 1QFY11 results. The IT major reported consolidated net profit of Rs 1,488 crore for the quarter ended June 2010, down 2.4 per cent from Rs 1,525 crore for the corresponding quarter of 2009. Revenue for the June 2010 quarter was at Rs 6,198 crore, up 13.3 per cent from Rs 5,472 crore year ago. Sequentially and on standalone basis, the company posted net profit of Rs. 1431 crore for the first quarter ended June 30, 2010, marginally lower from Rs. 1430 crore for the quarter ended March 31, 2010. Net sales for the June quarter was at Rs. 5758 crore compared with Rs. 5500 crore for the quarter to March. However, the company raised full-year revenue growth forecast in dollar terms.

“While we must admit that we were expecting a better June quarter, what is truly remarkable is that this usually conservative company has chosen to make a big statement for the future. We were expecting a 3.5%QQ as the base guidance for Sep-10 quarter revenues but the company has guided for 5.1%QQ.

These are meaningful signs of confidence from any company but coming from Infosys, they draw a line in the sand that proclaims robust demand and visibility of growth despite the macro-economic chatter heard from Europe recently.

We believe that our street high estimate of 25-26%YY $-revenue growth for FY11 is reasonable,” said CLSA.

Unitech (6.05%), DLF (4.38%), Suzlon Energy (4.33%), Tata Steel (2.22%), Jaiprakash Associates (2.12%) and Reliance Industries (1.71%) were amongst the top Nifty gainers.

Idea Cellular (-5.85%), Infosys Technologies (-3.42%), TCS (-2.15%), Bharti Airtel (-1.91%) and Wipro (-1.43%) were amongst the losers.

Market breadth was positive on the BSE with 1694 gainers against 1188 losers.

European markets gained momentum and stock futures indicate a positive start in US. At 4:20 pm IST, Dow Jones gained 0.49 per cent, Nasdaq moved 0.77 per cent up and S&P 500 advanced 0.63 per cent.

Regards,
Free Indian Stock Tips Team