The Bombay Stock Exchange benchmark Sensex on Monday touched the psychological 18,000-level for the first time in three months, but pared some of the gains to end 104 points higher.
Hopes of India Inc recording robust earnings for the first quarter saw the barometer opening on a strong note and surging 176 points to touch a high of 18,010.07, a level last seen on April 7.
Markets, however, lost some ground after industrial output in May fell short of investor expectations. The Index for Industrial Production (IIP) for the month of May stood at 11.5 per cent against 16.5 per cent in April. Growth in all sectors declined in May except for the electricity sector.
The 30-share index finished at 17,937.20 points, higher by 103.66 points, or 0.58 per cent from its previous close.
Likewise, the wide-based Nifty 50 of the National Stock Exchange crossed 5,400-mark after 29 months before ending 0.57 per cent higher at 5,383 points. This is Nifty’s best closing since February 5, 2008.
Some brokers sounded cautious that a correction is now inevitable at current levels, while some others said Nifty could even test 5,500 soon.
“May IIP growth of 11.5 per cent was significantly below our and consensus estimates. Given the waning base effect, we expect IIP growth to decelerate further over the next few months to single digit growth of about 8-9 per cent,” India Infoline Economist Ashutosh Datar said.
Realty, banking, IT and technology, led the rally and their sectoral indices rose in the range of 1-2.25 per cent.
A day ahead of the announcement of its Q1 earning, IT bellwether Infosys climbed 0.80 per cent. Other IT firms also attracted buying, with TCS rising 2.19 per cent and Wipro 2.25 per cent.
Domestic brokerage Emkay said it expects a revenue growth in the range of 3-5 per cent in dollar terms for frontline IT firms, with Infosys expecting to clock the highest 5 per cent.
The first quarter result of IT majors Infosys and TCS will also set the ball rolling for the quarterly results season front in the real sense, analysts said.
Brokerages predict that earnings growth will be robust in the current financial year. “Consensus earnings for the Sensex are expected to rise 20.1 per cent in FY’11 and a further 18.1 per cent in the next fiscal, after 13 per cent growth in FY’10,” Religare Capital Markets said.
DLF zoomed 2.38 per cent, the most in the Sensex scrips, followed by Tata Motors, which ended 2.32 per cent up.
ICICI Bank and HDFC Bank both jumped 2.06 per cent, HDFC 1.18 per cent and SBI 1.30 per cent.
Reliance Industries, which carries the maximum weight in the Sensex, did not participate in the rally and closed 0.01 per cent lower at Rs 1,055.75.
