BSE Sensex edges up HUL hits record high, Wipro falls

The Sensex rose on Tuesday in volatile trading, snapping two sessions of falls after Hindustan Unilever Ltd (HUL) surged to a record on robust earnings, although Wipro dropped after the software services exporter issued a subdued earnings forecast.

A rebound in China’s factory data on Tuesday only had a brief impact, as investors focused on the Euro zone debt crisis, especially as Spain’s rising debt yields spark concerns the country would need a bailout.

Adding to the fears, Moody’s Investors Service downgraded Germany’s sovereign outlook to “negative” yesterday, while data on Tuesday showed Euro zone private sector continued to shrink.

At home, days after the Presidential elections, investors are still waiting for the government to act decisively and take tough decisions to revive the economy by reducing the fiscal deficit and reviving the investment cycle.

“The main thing on the mind of market is policy issues because I think global factors are factored, unless there is a catastrophic event in Europe,” said Sandip Sabharwal, chief executive of Portfolio Management Services at brokerage Prabhudas Lilladher.

“Given valuations are cheap, what we need to see is how the government moves on policy initiatives.”

The Sensex rose 0.24 per cent, or 40.73 points, to 16,918.08 points, snapping a 2.3 per cent fall over the previous two sessions. The Nifty gained 0.24 per cent to end at 5,128.20 points.

As investors track developments in the Euro zone and at home, markets are likely to react to a slew of earnings announcements due this week, traders said.

HUL surged 7.5 per cent, touching earlier a record high of Rs 477.75, after yesterday reporting April-June quarterly earnings that handily beat estimates. CLSA upgraded its target price on the stock to Rs 485 while retaining its ‘overweight’ rating, calling HUL’s earnings ‘a strong all-around performance.’

Other consumer goods stocks also rose, as they are seen as a defensive play with good growth potential. Cigarette maker ITC rose 0.3 per cent ahead of its earnings results on Thursday.

Lupin rose two per cent after saying consolidated net profit surged 33.3 per cent to Rs 280 crore from a year earlier, in line with consensus expectations. Speculation of disappointing earnings results had pressured the drug maker over the last week.