Market extends rally on Fed remark, Infy result; Sensex up 2%

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 USD 85 billion a month bond-buying programme.

Mumbai: US Fed's 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 2 percent to end at nearly 6-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 USD 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 percent, 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 percent.

The broad-based 50-issue CNX Nifty of the NSE zoomed by 141.10 points, or 2.40 percent, to end at 6,009, also a 6-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 Bangalore-based software exporter was top gainer from the Sensex pack, rising 14.19 percent in the week.

The company, whose numbers marked the start of the earnings season, retained its dollar revenue guidance for the fiscal at 6-10 percent. Infosys revised its rupee revenue guidance upwards to 13-17 percent, from 6-10 percent earlier, on account of rupee's depreciation against dollar.

The country's second-largest software exporter posted an almost 4 percent 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 9 percent 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.

Meanwhile, the Index of Industrial Production (IIP) contracted by 1.6 percent in May, lowest in the past 11 months, as against 1.9 percent in April and 2.5 per cent in May last year on account of poor show by the manufacturing and mining sectors.

Retail inflation (CPI) inched up to 9.87 percent in June, from 9.31 percent in the previous month. The food inflation in June also rose to 11.84 percent from 10.65 per cent in last month.

Subdued import of gold and silver pulled down the trade deficit in June to USD 12.2 billion from USD 20.1 billion, despite 4.56 percent contraction in exports during the month.

The IIP and retail inflation data was announced after the market hours on Friday that would have impact on Monday while market participants are also eyeing on Whole Price Inflation (WPI) on Monday and the next batch of Q1 results which will dictate the future trend.

19 scrips out of the Sensex pack ended higher while 10 others finished lower.

Major gainers from the Sensex pack were Infosys at 14.19 percent followed by Sunpharma (7.11 percent), Wipro (7.04 percent), L&T (ex-bonus) 5.72 percent, Bhel (5.24 percent), TCS (5.16 percent), Sterlite Inds (5.12 percent), Dr Reddy (4.96 percent), Tata Power (4.50 percent), HDFC Bank 4.35 percent, Hero Honda (3.74 percent), Bharti Airtel (3.18 percent), ITC (2.25 percent), Hindalco (1.80 percent) and Cipla (1.48 percent).

However, Mahindra & Mahindra dropped by 6.44 percent, Maruti Suzuki (6.28 percent), ONGC (6.07 percent), Tata Motors (1.43 percent), HUL (1.27 percent), GAIL (1.21 percent) and Tata Steel (0.75 percent).

Among the major indices, S&P BSE-IT shot up by 9.63 percent followed by S&P BSE-Teck at 7.89 percent, S&P BSE-CG at 4.45 percent, S&P BSE-HC at 3.33 percent, S&P BSE-Power at 2.74 percent, S&P BSE-Bankex at 2.59 percent and S&P BSE-CD at 2.24 percent while S&P BSE-Auto dropped by 2.28 percent, S&P BSE-Oil&Gas by 1.30 percent and S&P BSE-PSU by 1.02 percent.

Foreign Institutional Investors (FIIs) pulled out Rs 668.08 crore during the week including provisional data of July 12. The total turnover at BSE and NSE was low at Rs 7,919.80 crore and Rs 46,408.59 crores, respectively as against the last weekend's level of Rs 8,928.19 crore and Rs 49,278.63 crore.