Bloomberg/Mumbai

Indian stocks rallied to a six-week high, led by software makers after Infosys’ earnings rose and its sales forecast in dollar terms beat analyst estimates.

The S&P BSE Sensex soared 1.4% to 19,958.47 at the close in Mumbai. Infosys, the second-largest software exporter, climbed the most in six months. Rivals Tata Consultancy Services and Wipro jumped about 3% each. Sun Pharmaceutical Industries climbed to a record.

Infosys, kicking off the reporting season for the quarter ended June, said it expects dollar revenue to rise 6% to 10% in the year to March 31, unchanged from its forecast in April. Ten analysts in a Bloomberg News survey expected the company to cut the top end of its guidance range to 7.5%.

The Sensex climbed 2.4% this week after Federal Reserve Chairman Ben S Bernanke said the US economy will continue to need stimulus.

“Infosys earnings will prompt more buying in the software sector as it has improved the outlook” for the industry, K K Mital, a portfolio manager at Globe Capital Market Ltd, said by telephone from New Delhi.

“The Fed’s comments have eased concerns of withdrawals. Global funds will resume buying local shares and the rupee’s depreciating trend will be checked.”

Foreign funds pulled $1.8bn from local shares in June, the most since August 2011, and a record $5.4bn from bonds. That fuelled the rupee’s drop to an unprecedented 61.2125 per dollar on July 8.

Infosys soared 11% to Rs2,804.20, extending this week’s advance to 14%, the sharpest gain on the Sensex. Outstanding contracts in the company’s futures jumped 36% to 31,613, the most on the National Stock Exchange.

Tata Consultancy Services added 2.9% to Rs1,609.85. Wipro gained 3.2% to Rs375.6. The S&P BSE Infotech Index surged 6.5% to its highest since April 3.

Tata Motors rose 2.7% to Rs292.5. Drugmaker Dr Reddy’s Laboratories climbed 3% to Rs2,349.45. Reliance Industries, owner of the world’s largest refining complex, rose 2.3% to Rs889.95.

Sun Pharmaceutical, the biggest drugmaker by value, gained 1.2% to Rs1,108.7. Engineering firm Larsen & Toubro rallied 3.2% to Rs995.5. HDFC Bank, the biggest lender by value, increased 1.8% to Rs695.75.

The Sensex has gained 2.7% this year and trades at 13.4 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.9 times. The CNX Nifty Index on the National Stock Exchange of India added 1.3% to 6,009, its highest close since May 30.

Indian companies’ sales growth is declining in an economy that expanded last quarter at near its slowest pace since 2009. Revenue for the 30 Sensex companies may have risen 3.8% from a year earlier in the three months ended June, the least in 16 quarters, according to Deutsche Bank.

Industrial output unexpectedly contracted in May, adding pressure for more government measures to revive the economy. Production at factories, utilities and mines fell 1.6% from a year earlier after a revised 1.9% climb in April, official data showed after the market closed. Another report showed consumer-price inflation accelerated to 9.87% last month, staying close to 10% for more than a year.

India’s rupee completed its first weekly gain since May, rebounding from a record low as policy makers took steps to curb speculation and boost dollar supply.

The rupee snapped the longest run of weekly declines in more than a year after the Federal Reserve and Bank of Japan indicated this week they will maintain stimulus that fuelled inflows into emerging markets. Indian regulators this week reined in derivatives trading and the central bank extended easier rules for overseas loans until September, after the rupee plunged to an unprecedented 61.2125 per dollar on July 8.

The rupee strengthened 1% this week to 59.630 per dollar in Mumbai, the first advance since the five days through May 3, according to prices from local banks compiled by Bloomberg. The currency rose 0.1% yesterday. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 27 basis points, or 0.27 percentage point, this week to 12.54%.

“To us, speculative activity is not the problem,” analysts at Brown Brothers Harriman & Co, including New York- based Marc Chandler, wrote in a research report on Thursday. “Twin deficits, high inflation, and sluggish growth all argue for continued rupee weakness. We fully expect more measures designed to help slow the move.”

India’s current-account deficit widened to a record 4.8% of gross domestic product in the year ended March 31, official data show, and the government aims to narrow the budget gap to 4.8% in the current fiscal year from 4.9% in the previous period. The rupee’s 7.8% decline this year kept the central bank from adding to its three interest-rate cuts even as growth slowed to a decade-low.

India is considering selling sovereign bonds abroad for the first time as policy makers weigh measures to help stem rupee declines, two officials with direct knowledge of the matter said.

Companies can continue to pay higher interest rates until the end of September to borrow from overseas, the Reserve Bank of India said in a statement on Thursday. The ceiling for such loans had been raised in March 2012 for an initial period of six months.

The RBI may lower banks’ net open position limits, according to a person with knowledge of the matter, who asked not to be named as the information is confidential. The authority barred lenders from proprietary trading in currency futures and exchange-traded options, according to a July 8 statement on its website. The Securities and Exchange Board of India said separately it will raise margin requirements and cap open positions in such contracts.

The RBI also asked India’s oil refiners, the largest buyers of foreign currency, to purchase dollars only from the State Bank of India, the nation’s biggest lender, CNBC-TV18 television channel reported July 9, citing people it didn’t identify.

India’s trade deficit narrowed to $12.2bn in June from $20.1bn in May as gold and silver imports fell to $2.45bn from $8.39bn, official data showed yesterday.

Consumer prices rose 9.3% last month, little changed from May, according to the median of 21 estimates in a Bloomberg survey before data due at 5.30 pm in new Delhi yesterday. Wholesale price-inflation probably quickened to 4.94% from a 43-month low of 4.7%, a separate survey shows before data scheduled for July 15.

Three-month onshore rupee forwards rose 0.9% to 60.86 per dollar this week, data compiled by Bloomberg show. Offshore non-deliverable contracts gained 1.8% to 61.05.

 

Asian shares mixed after record close on Wall Street

Asian markets were mixed yesterday, with a record-breaking close on Wall Street offset by profit-taking after the previous day’s broad gains.

Japan’s Nikkei edged higher, however, as traders bought back into the dollar following comments from the head of the US Federal Reserve that its stimulus programme would be kept in place for some time.

Tokyo rose 0.23%, or 33.67 points, to 14,506.25 and Sydney added 0.17%, or 8.2 points, to close at 4,973.9. But Seoul dipped 0.41%, or 7.62 points, to 1,869.98.

Shanghai fell 1.62%, or 33.50 points, to 2,039.49 as profit-takers moved in after enjoying a more than 3% rally on Thursday.

Hong Kong slipped 0.75%, or 160.21 points, to 21,277.28.

Regional sentiment was largely positive after the Dow and S&P 500 surged to new highs on Wall Street as investors cheered Ben Bernanke’s statement that the Fed would continue its bond-buying “for the foreseeable future”.

While he said the economy was showing signs of strength, Bernanke was still concerned about high unemployment and inflation.

The Dow surged 1.11% and the S&P 500 rallied 1.36%, while the Nasdaq added 1.63% to end at its highest level since September 2000.

Bernanke’s comments sent the dollar tumbling about 2.5% against the yen on Thursday before it picked up a tad to sit at ¥98.90 by New York’s close on Thursday.

In European trade yesterday it was at ¥99.14. The euro fetched $1.3047 and ¥129.36 compared with $1.3092 and ¥129.50.

On oil markets New York’s main contract, West Texas Intermediate (WTI), for delivery in August, eased 24¢ to $104.67 a barrel, while Brent North Sea crude for August shed 21¢ to $107.52.

WTI hit a 15-month high of $107.45 in New York on Thursday and Brent reached $108.93.

Gold fetched $1,276per ounce at 1030 GMT, compared with $1,283.45 late Thursday.

In other markets, Taipei rose 0.5%, or 40.95 points, to 8,220.49; Wellington added 0.18%, or 8.28 points, to 4,568.33; Singapore closed down 0.4%, or 12.86 points, at 3,236.06; Manila closed 2.6% higher, adding 166.85 points to 6,574.21; Jakarta ended 0.63%, or 28.89 points, higher at 4,633.11; Kuala Lumpur gained 0.24%, or 4.21 points, to 1,785.65; Bangkok rose 0.46%, or 6.67 points, to 1,453.71.