The BSE Sensex extended gains in post-noon trade, rising over 100 points on Thursday as Infosys, the second biggest IT outsourcer in India, surged over 5 per after announcing a likely share buyback, while Asian markets rose as tensions between the U.S. and North Korea eased. Shares of Infosys, rose as much as 5.2 per cent after the company said on Wednesday its board would consider a proposal to buy back shares at a meeting later this month.
“For Infosys, the buyback will lead to higher RoE and payout ratio. We do not perceive this move to be an outcome of lower growth, instead it well means limited possibilities of large acquisitions going ahead, and consistent generation of cash,” domestic brokerage Edelweiss said. The brokerage has a “buy” rating on Infosys with a target price of Rs. 1,155.
Infosys buyback also boosted sentiment for other IT stocks. Tech Mahindra was up 1.8 per cent while HCL Tech rose 1 per cent. The IT sub-index of NSE was up over 1.5 per cent.
“Infosys buyback is a very good thing for other IT companies,” said AK Prabhakar, head of research, IDBI Capital.
Sentiment was also upbeat across global markets with Asian shares advancing as tensions between the U.S. and North Korea came off the boil, although the Federal Reserve’s concerns about weak U.S. inflation weighed on the dollar.
As of 1:26 pm, NSE Nifty was up 0.38 per cent at 9,935.45, while the benchmark BSE Sensex was 0.35 per cent higher at 31,884.
Other than IT, metal stocks also witnessed buying today. Nifty Metal, NSE’s sub-index for metal shares was up 1.32 per cent.