S D Shibulal, CEO and managing director of Infosys Limited, and chief financial officer V Balakrishnan pose after announcing the company’s 2011 third quarter results in Bangalore (file). Infosys, the first Sensex company to announce earnings for the December quarter, reported net income of Rs23.7bn yesterday.
Most Indian stocks dropped, led by consumer goods companies and industrials, as a contraction in the nation’s factory production countered better-than-expected earnings by Infosys.
All but four of the 30 shares on the BSE India Sensitive Index fell even as the measure closed unchanged at 19,663.64. Cigarette maker ITC and Bharat Heavy Electricals, the largest power-equipment maker, slid more than 2%. Infosys, the second-largest software maker, soared a record 17% after raising its full-year sales forecast. The stock was the best performer on the gauge, followed by rivals Tata Consultancy Services and Wipro.
Foreigners have bought a net $1.5bn of shares this year, more than three times the level at the same time in 2012. The Sensex closed near a two-year high on January 8, extending last year’s 26% gain.
The Indian stock gauge last year had its biggest annual rally since 2009, as Prime Minister Manmohan Singh opened the economy to more foreign investments in the past four months to boost an economy growing at the slowest pace in three years and to avert a credit-rating downgrade. The steps prompted offshore funds to invest a net $24.5bn into domestic shares last year, the highest among 10 Asian markets tracked by Bloomberg.
Infosys, the first Sensex company to announce earnings for the December quarter, raised its sales forecast about 3% to Rs407.5bn ($7.5bn) and reported net income of Rs23.7bn. That surpassed the Rs22.4bn median of 42 analyst estimates compiled by Bloomberg. The stock was the worst performer on the Sensex in 2012.
Infosys soared 17% to Rs2,712.1, the sharpest gain since the company’s debut in 1993. Rival Tata Consultancy, due to declare earnings on January 14, rallied 3.8% to Rs1,306.35. Wipro jumped 6.2% to Rs419.95.
Net incomes of the 30 Sensex companies may grow 11% from a year ago in the December quarter, after rising 7% in the previous three months, Kotak Institutional Equities said in a January 3 report. Profit for 40% of the Sensex firms missed analysts’ estimates for the September quarter, the same as for the quarter ended June, data compiled by Bloomberg show.
The S&P CNX Nifty Index on the National Stock Exchange of India fell 0.3% to 5,951.3. Its January futures settled at 5,977.3. The BSE Mid-Cap Index decreased 1.5%, the most in more than five months. India VIX, which gauges the cost of protection against losses in the Nifty, declined 0.3%.
The Sensex trades at 15.6 times estimated earnings, the highest reading since March. The MSCI Emerging Markets Index is valued at 10.9 times, according to data compiled by Bloomberg.
Meanwhile, India’s rupee completed its biggest weekly gain since November on speculation the central bank will reduce borrowing costs to support economic growth.
The currency advanced 0.6% this week to 54.7625 per dollar in Mumbai, the biggest increase since the five days through November 30. The rupee fell 0.3% yesterday and touched 54.4050 earlier.
One-month implied volatility in the rupee, a gauge of expected moves in exchange rates used to price options, rose 15 basis points, or 0.15 percentage point, to 9.95% this week. The rate climbed 10 basis points yesterday.
Three-month onshore rupee forwards traded at 55.71 per dollar, compared with 55.57 Thursday. Offshore non-deliverable contracts were at 55.69 versus 55.57.