Banks help Sensex post strong gains

Mon, 24 Feb Closing

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The Indian equity benchmark indices extended gains in the afternoon trading session today and closed the day on a firm note. Buoyed by strong institutional buying and increased overseas investments, the Sensex today neared to four-week highs. Keeping up with the momentum, the BSE Small Cap and the BSE Mid Cap indices were up by 0.2% and 0.3% respectively. The BSE-Sensex closed higher by 111 points and the NSE-Nifty was seen up by 31 points.

On the global front, most of the Asian indices closed the day on a pessimistic note and European indices opened the day on a mixed note. The rupee was trading at Rs 61.93 to the dollar at the time of writing.

Stocks from the Power sector closed the day on a mixed note with Tata power and PTC India Ltd leading the pack of gainers whereas stocks such as National Thermal Power Corporation (NTPC) and Jaiprakash Power were leading the pack of losers.

Shares of Tata Power and Adani Power reported firm gains today. As per a leading financial daily, the power regulator has decided to raise tariffs for electricity from their plants in Mundra which is expected to boost the earnings outlook of the two companies. The plants at Mundra in Gujarat are amongst the biggest for both the utilities. These plants have been struggling with higher coal costs. In addition to tariffs raise, the regulator has also allowed these utilities to charge higher tariffs to the state-run electricity distributors for the electricity they bought last year.

This comes as a major and welcoming move from the regulator. This was a big overhang for Tata Power. Moreover, this decision is expected to have positive outcome on the bottom-line of the company in the forthcoming quarters.

Stocks from the software sector closed the day on a mixed note with NIIT Ltd and Moser-Baer India leading the pack of gainers whereas stocks such as Mphasis Ltd and Tata Consultancy Services (TCS) were leading the pack of losers.

As per a study by Gartner, the Government of India is expected to spend close to US$ 6.4 bn on IT products and services in 2014. This figure would be higher by over 4% YoY as compared to the previous year. This spending is expected to be on various segments including internal IT (including personnel), hardware, software, external IT services and telecommunications. Within this, IT services segment contributes the maximum. The growth rate for this segment is expected to be a little less than 4%. As per the Hindu Business Line, services such as consultation, implementation, IT outsourcing and business process outsourcing, amongst others for part of this segment. However, the fastest growing segments within this space would include the business process outsourcing vertical. As for the internal services vertical, the same is expected to grow at a pace of 9.4% YoY in 2014. This development comes in as positive news for the IT companies that are predominantly focusing on Indian markets or for those who are looking to grow their Indian businesses. Amongst the large players, TCS has the highest exposure to Indian markets with the same contributing to nearly 6.3% of its revenues.