Sensex Gains, Erasing This Week’s Loss as Wipro, Larsen & Toubro Advance

By Santanu Chakraborty and Rajhkumar K Shaaw - Jul 22, 2011

India’s benchmark stock index rose, erasing this week’s losses, after European leaders agreed on aid for Greece, easing concerns the region’s debt crisis may spread and threaten global growth.

Wipro Ltd. (WPRO), the nation’s third-biggest software services provider, paced gains among peers. India’s largest software makers get a quarter of the sales from Europe. After eight hours of talks in Brussels, leaders announced 159 billion euro ($229 billion) in new aid for Greece late yesterday, risking temporary default in their efforts to prevent the crisis spreading. Larsen & Toubro Ltd. (LT), the largest engineering company, added 1 percent.

“The market is are reacting positively to global cues,” said Manish Sonthalia, who manages $300 million in equities at Mumbai-based Motilal Oswal Asset Management Co., in a Bloomberg UTV interview. Indian stocks may “perform better” in the second half of the year and the central bank may not raise rates at its meeting next week, he said.

The Bombay Stock Exchange Sensitive Index, or Sensex, gained 122.45, or 0.7 percent, to 18,558.64 at 9:55 a.m. in Mumbai. The gauge is set for a 0.1 percent advance this week. The index has declined 10 percent this year, the second-worst performer among key indexes in the world’s 10 biggest markets, amid rate increases.

The S&P CNX Nifty Index on the National Stock Exchange rose 0.6 percent to 5,576.85 and its July futures traded at 5,583.85. The BSE 200 Index increased 0.7 percent to 2,300.95.

An “upswing in returns, earnings, cash generation and potential easing in macro and growth concerns should drive the market higher,” Aditya Narain, an analyst at Citigroup Inc., wrote in a report received today. “The current year should be good for corporate India.” The brokerage maintains a positive outlook for India stocks and has a Sensex target of 21,500 for December 2011.

Wipro gained 0.7 percent to 404 rupees. Infosys Ltd., the second-largest software services provider, rose 0.7 percent to 2,787.4 rupees and larger rival Tata Consultancy Services Ltd. (TCS) gained 0.6 percent to 1,129.25 rupees.

Larsen climbed 0.9 percent to 1,806.05 rupees.

Overseas funds sold a net 311 million rupees of Indian equities on July 20, paring their investment in stocks this year to 96.2 billion rupees, according to data on the website of the Securities and Exchange Board of India. Companies on the measure are valued at 14.8 times estimated earnings, compared with 11 times for the MSCI Emerging Markets Index.

To contact the reporters on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net; Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
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