Infy Q2 results cheer market; Sensex vaults 5.2%

The market gave thumbs up to good Q2 results from IT bellwether Infosys, which also raised its full year earnings guidance on Wednesday, 12 October 2011. Data showing sustained buying by foreign funds recently underpinned sentiment. The market rose in three out of five trading sessions during the week, with the barometer index BSE Sensex settling above the psychological 17,000 mark and the S&P CNX Nifty regaining the psychological the 5,000 level.



Foreign institutional investors (FIIs) inflow totaled Rs 2082.50 crore in five trading sessions from 7 October 2011 to 13 October 2011, as per data from stock exchanges. The recent inflow came after heavy outflow early this month. FIIs had dumped shares worth a net Rs 2806.19 crore in the first three trading sessions from 3 October to 5 October 2011.

The BSE Sensex gained 850.15 points or 5.24% to settle at 17,082.69 in the week ended Friday, 14 October 2011. The 50 share S&P CNX Nifty rose 244.25 points or 5% to 5,132.30

The BSE Mid-Cap index advanced 3.87% and the BSE Small-Cap index rose 2.77%. Both these indices underperformed the Sensex.

Trading for the week began on a buoyant note as the key benchmark indices rose on Monday, 10 October 2011, as euro-zone debt worries eased after assurances from French and German leaders that they will do everything necessary to support Europe's banks. The BSE Sensex was up 324.69 points or 2% to 16,557.23.

Key benchmark indices edged lower amid intraday volatility on Tuesday, 11 October 2011, as European stocks declined and US index futures edged lower. The BSE Sensex lost 20.76 points or 0.13% to settle at 16,536.47

Good Q2 results from IT bellwether Infosys, which also revised upwards its full year earnings guidance, firm global stocks and data showing buying by the foreign funds recently, helped the key benchmark indices edge higher on Wednesday, 12 October 2011. The BSE Sensex was up 421.92 points or 2.55% to settle at 16,958.39.

Key benchmark indices edged lower amid intraday volatility on Thursday, 13 October 2011, as weak European shares triggered profit taking after recent strong gains in share prices. The BSE Sensex lost 74.47 points or 0.44% to settle at 16,883.92.

Key benchmark indices surged on Friday, 14 October 2011, as firm European shares, higher US index futures and data showing sustained buying by foreign funds recently boosted sentiment. The BSE Sensex jumped 198.77 points or 1.18% to settle at 17,082.69.

Among the 30-Sensex shares, 28 advanced while only two of them declined during the week.

Index heavyweight Reliance Industries (RIL) advanced 8.15% to Rs 866.80 on expectations of good Q2 results. RIL's advance tax payment rose 37.6% to Rs 1800 crore in Q2 September 2011 over Q2 September 2010, hinting at good Q2 results from the diversified firm. RIL unveils Q2 results on Saturday, 15 October 2011.

India's largest truck maker by sales Tata Motors jumped 13.29% to Rs 179.90 and was the top gainer from the Sensex pack. The stock surged as euro-zone debt worries eased. UK unit, Jaguar Land Rover, generated 57% of Tata Motors' revenue during the year ended 31 March 2011, up from 53% a year earlier.

Tata Motors recently introduced its Manza sedan and Prima range of trucks in South Africa at the Johannesburg International Motor Show. "We see Africa as a region of tremendous potential for the group," Noel Tata, managing director of Tata International, the trading arm of Tata Group, said in a statement. "In South Africa, the auto industry is making giant strides and we are happy to contribute to this growth." Tata Motors sells its passenger vehicles and light trucks in South Africa through a local joint venture between group company Tata Africa Holding and South Africa's Associate Motor Holdings. Other trucks and buses are sold through a wholly owned subsidiary of Tata Africa, Tata Automobile Corporation South Africa (Pty).

India's top small car maker by sales Maruti Suzuki India lost 7.6% to Rs 1028.45 on labour woes. The stock was the biggest loser from the Sensex pack last week. The company on Friday, 14 October 2011, said police has started efforts to evict about 1,500 striking workers at its Manesar plant following directions from Punjab and Haryana High Court. The stock hit a 52-week low of Rs 1,022.10 on 14 October 2011. The workers at the Manesar plant have struck work and have been protesting inside the factory premises since 7 October 2011. The workers are demanding reinstatement of 44 of their suspended colleagues who weren't taken back by Maruti after a 33-day long labor unrest ended 1 October 2011.

Interest rate sensitive banking stocks edged higher on hopes a slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. India's second largest private sector bank by net profit HDFC Bank rose 5.41%. India's largest private sector bank by net profit ICICI Bank rose 8.02%

India's largest bank by branch network State Bank of India (SBI) gained 7.46% on hopes of capital infusion from the Government of India, its majority shareholder. Financial Services Secretary D.K. Mittal on 11 October 2011 said that the government will inject Rs 3000 crore to Rs 4500 crore in SBI this fiscal year to help improve its capital base. "The capital infusion in SBI may happen by December-end, but definitely before 31 March 2011," Mittal said. His comments come after Moody's Investors Service last week cut its rating on SBI's financial strength to D+ from C- and lowered its hybrid debt rating on the bank to Ba3 (hyb) from Ba2 (hyb), flagging concerns over capital and deteriorating loan quality.

Mittal said that the rating downgrade was "shocking" and "unfair", and that some banks in developed countries were rated higher despite their asset quality being inferior to SBI's, He also said that the capital infusion may not be through a rights issue or a public share sale as market conditions weren't right for that, but through other methods. He didn't elaborate.

The government on Thursday, 13 October 2011, approved amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and debt recovery acts to enable banks to effectively deal with the menace of bad loans and also encourage them to disburse credit freely to home and corporate loan seekers. The Cabinet approved the introduction of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, in the next Winter Session of Parliament.

IT bellwether Infosys surged 9.48% on good Q2 results and upward revision in full year earnings guidance. Infosys announced before market hours on 12 October 2011, that its consolidated net profit as per International Financial Reporting Standards (IFRS) rose 10.68% to Rs 1906 crore on 8.2% growth in revenue to Rs 8099 crore in Q2 September 2011 over Q1 June 2011.

Infosys has forecast 9.72% to 11.11% growth in non-annualized earnings per American Depositary Share at $0.79 to $0.80 in Q3 December 2011 over Q2 September 2011. It has forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011.

The company has for the second quarter in a row revised upwards its dollar earnings guidance for the year ending March 2012 (FY 2012). The company expects 15.3% to 16.8% growth in earnings per American Depositary Share at $3.02 to $3.06 in FY 2012 over the year ending March 2011 (FY 2011). However, the company has revised downwards dollar revenue growth guidance for FY 2012. The company expects 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion in FY 2012 over FY 2011.

Infosys has forecast 15.4% to 1.7.5% growth in non-annualised earnings per share (EPS) at Rs 38.51 to Rs 39.20 in Q3 December 2011 over Q2 September 2011. The company has forecast 8.97% to 11.2% growth in revenue at Rs 8826 crore to Rs 9012 crore in Q3 December 2011 over Q2 September 2011.

Thanks to a recent steep fall in rupee against the dollar, Infosys has sharply revised upwards EPS guidance for FY 2012. The company has projected 19.7% to 21.6% growth in EPS at Rs 143.02 to Rs 145.26 in FY 2012 over FY 2011. The company has also revised FY 2012 revenue guidance upwards. Infosys has projected 21.8% to 24% growth in revenue at Rs 33501 crore to Rs 34088 crore in FY 2012 over FY 2011.

India's largest software services exporter TCS jumped 8.18% ahead of its Q2 results on 17 October 2011. India's third largest software services exporter Wipro rose 8.81% ahead of its Q2 results on 31 October 2011.

India's largest coal miner by capacity Coal India lost 4.43% to Rs 322.30 on reports the company's workers are likely to go on strike for three days, demanding an increase of as much as 57% in bonus payments. It was the top loser from the Sensex pack.

Jindal Steel & Power (up 8.96%), Bharti Airtel (up 8.16%), Sterlite Industries (India) (up 4.94%), Bajaj Auto (up 8.4%), and DLF (up 6.34%) edged higher from the Sensex pack