Stocks: US Federal Reserve decision to continue with the easy-money policy and better-than-expected Q1 results from IT major Infosys kept the market tempo upbeat for the third straight week as both the key indices surged by over two per cent to end at nearly six-week high.
The Bombay Stock Exchange 30-share barometer, S&P sensex, resumed lower and dipped further to one-week low of 19,185.92 after positive US jobs data triggered concerns that the American central bank will slow the pace of its monetary stimulus later this year.
The market was also impacted after the rupee hit a record low of 61.21 to a dollar on possible winding down of the Fed’s $85 billion a month bond buying programme.
However, a smart recovery in rupee amid steps taken by Sebi and Reserve Bank to curb speculative trade in currency derivatives and US Fed chief’s comments about continuing monetary incentive helped the sensex to bounce back with a vengeance and end higher by 462.65 points, or 2.37 per cent, at 19,958.47, a level not seen since May 30.
In the last three weeks, the sensex has zoomed by a staggering 1,184.23 points, or 6.31 per cent.
The broad-based 50-issue CNX Nifty of the NSE zoomed by 141.10 points, or 2.40 per cent, to end at 6,009, also a six-week high.
Trading sentiment was bolstered after Fed chief Ben Bernanke on Wednesday signalled that the monetary stimulus would continue for some time, boosting the prospects of fund flows to the emerging markets, including India, brokers said.
The bond-buying programme, which has flooded global markets with liquidity, has helped support an array of assets, including equities.
Infosys, which announced its Q1 numbers on early Friday, fuelled a rally in IT stocks when, contrary to expectations, it kept revenue guidance for FY14 unchanged.
The Bengaluru-based software exporter was top gainer from the sensex pack, rising 14.19 per cent in the week.
The company, whose numbers marked the start of the earnings season, retained its dollar revenue guidance for the fiscal at six to 10 per cent. Infosys revised its rupee revenue guidance upwards to 13-17 per cent, from six to 10 per cent earlier, on account of rupee’s depreciation against dollar.
The country’s second-largest software exporter posted an almost four per cent increase in consolidated net profit to Rs 2,374 crore for the April-June period, which was above market expectations.
“Despite facing an uncertain macro-environment, changing regulatory regime and a volatile currency environment, we have done well in Q1 and are cautiously optimistic about rest of the year,” Infosys CEO and managing director S.D. Shibulal said.
Besides IT counters, shares of capital goods, power, pharma, banking and consumer durable companies were also in the limelight. However, auto, refinery and PSU scrips logged losses on selling.
Auto shares were at the receiving end as car sales fell nine per cent in June compared to the same month last year as demand continued to suffer due to rising ownership costs and sluggish economic growth, with demand dropping for the eighth straight month.
On the global front, most of the markets closed with gains after US Fed’s decision on stimulus and Alcoa Inc’s Wall Street beating earnings.