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Markets

India shares little changed as US threat on China damps risk assets

Tata Consultancy rises to record after upbeat earnings

MUMBAI (NewsRise) -- Indian shares ended little changed on Wednesday after the U.S. threatened to impose more tariffs on China, offsetting Tata Consultancy Services' earnings-driven gains.

The BSE Sensex rose less than 0.1% to 36,265.93 and the Nifty 50 Index closed almost unchanged at 10,948.30. Zinc miner Vedanta slipped 3.5%, aluminum producer Hindalco Industries lost 3.4%, and Tata Steel slipped 2.2% as the latest U.S. tariff threats triggered a broad selloff in global industrial commodities. ICICI Bank and State Bank of India paced losses among lenders, falling by 1.7% or more.

Tata Consultancy jumped 5.5% to record levels after what Morgan Stanley called "an all-round beat" on June quarter earnings. After market hours on Tuesday, India's most valuable company reported a better-than-expected 24% jump in first-quarter net profit, helped by the recovery in demand from its financial services clients.

"Despite the year-to-date outperformance and valuation premium relative to the Sensex and larger Indian peers, TCS is best positioned due to superior revenue and earnings growth," Morgan Stanley said in a note.

The advance in TCS helped offset the impact from rising global risk aversion caused by the U.S. threatening tariffs on additional $200 billion worth of Chinese goods. The U.S. Trade Representative said that in light of China imposing retaliatory tariffs on U.S. imports, it is proposing action on $200 billion more of Chinese goods. Beijing, last Friday, had levied extra duties on $34 billion of U.S. imports in response to a similar move by Washington.

"The tariff would not take effect until September at the earliest, but nonetheless marks an escalation of trade tensions," Goldman Sachs said in a note.

China's Ministry of Commerce, in response to the latest tariff threat, said Beijing will be forced to take "necessary countermeasures." The remarks were carried by China's official news agency Xinhua.

China's benchmark index tumbled 1.8% and Hong Kong's dropped 1.3%. The Nikkei Asia300 Index of companies shed more than 1% and the Dow Jones Industrial Average futures fell by more than 200 points.

Among other movers on the BSE, IDBI Bank rose 7.1%. Bloomberg reported that Life Insurance Corp. of India's investment in IDBI Bank may trigger an open offer for the state-owned bank.

PNB Housing Finance rose 3.4% after the company said Punjab National Bank and a Carlyle Group company were looking to sell a minimum of 51% in the mortgage company.

Infosys added 1.4%, Wipro climbed 0.7%, and HCL Technologies rose 1.6%, buoyed by TCS's earnings. Infosys reports June quarter earnings on Friday and Wipro will details its results on July 20.

--Nimesh Vora

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