Sensex gains 111 points as earnings improve sentiment

Last Updated: Mon, Oct 22, 2012 13:00 hrs

By Abhishek Vishnoi

MUMBAI (Reuters) - The BSE Sensex rose on Monday after strong earnings from blue-chip companies such as Larsen & Toubro and Tata Consultancy Services improved the market sentiment, but Kingfisher Airlines slumped after the civil aviation authorities suspended its flying licence.

Gains in banking stocks such as ICICI Bank on expectations the RBI may cut the cash reserve ratio, or the amount of deposits lenders must keep with the RBI, at its policy review on October 30 also helped.

Although a cut in the repo rate is seen as less likely, with only nine out of 37 analysts predicting such an outcome in a Reuters poll out last week.

Action would remain stock specific as a slew of blue chip earnings will continue to dominate Indian stock markets, with Hero MotoCorp , IDFC and ICICI Bank set to post results this week.

"It's a decent earning season, better than expected overall. There are hardly any big disappointments except Infosys," said Jagannadham Thunuguntla, head of research at SMC Investment and Advisors Ltd.

The BSE Sensex rose 0.59 percent, or 111.13 points, to 18,793.44, rebounding from an earlier fall of as much as 0.44 percent.

The 50-share Nifty rose 0.58 percent, or 32.90 points, to 5,717.15.

Top construction and engineering company Larsen & Toubro ended 2.3 percent higher, after beating estimates with a 42.4 percent rise in net profit for the July-September quarter.

Tata Consultancy Services gained 2.3 percent after posting a 44 percent rise in quarterly profit late on Friday.

Shares in Indiabulls Financial Services rose 4 percent, after reporting higher-than-expected rise of 30.57 percent in its Sept quarter net profit.

Banks also advanced on hopes a cut in the CRR would improve margins given they do not earn interest on the deposits held by the central bank.

ICICI Bank gained 1.73 percent, recovering from a 0.7 percent fall on Friday, while HDFC Bank rose 1.67 percent.

However, among stocks that fell, public sector banks continued to disappoint markets by showing worse-than-expected asset quality.

Bank of Baroda shares fell 1.6 percent after the state-run bank posted a bigger-than-expected rise in non-performing assets in Sept quarter earnings.

Battery maker Exide Industries shares fell 4 percent, having already dropped 8.9 percent on Friday, after posting July-September profit that was well below expectations.

Shares in Kingfisher Airlines dropped 4.8 percent on Monday, after the civil aviation regulator cancelled its licence, forcing the the debt-laden carrier to stop bookings.

(Additional reporting by Manoj Dharra; Editing by G.Ram Mohan)

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