Indian shares at 2-½ month closing high
MUMBAI: Indian shares gained for the seventh day and were on track for their best monthly performance since last September, closing 0.9 per cent higher on Wednesday, as world equities gained on hopes the global economy is recovering and crude oil prices eased.
Investors, however, were skeptical about the momentum spilling over to the next month after the rally that has propelled Indian stocks to two-and-ahalf-month closing highs.
Lenders led the charge on optimism over loan demand outlook on expectations the economy would continue to grow at a fast pace. The banking sector index gained 1.7 per cent.
The 30-share BSE index rose 0.89 per cent, or 169.38 points, to 19,290.18 points, its highest closing level since Jan. 12, with 23 of its components closing in the green. Market breadth pointed to a broad-based rally, with gainers beating losers in a ratio of 2.6 to 1 in a volume of 322 million shares on the BSE, higher than the 30-day daily average of 278 million shares.
Foreign funds have pumped in nearly $1 billion in Indian equities in March, driving the benchmark index 8.1 per cent higher. "This rally is not likely to last long. Earnings need to be eyed next," said Arun Kejriwal, director of research firm KRIS.
Indian companies are scheduled to start reporting their results for the quarter and fiscal year ending March from the second week of April.
"Margins for this quarter and fiscal year could be under pressure. Rising inflation, input costs could squeeze them," Kejriwal said.
Headline inflation in India tops 8 per cent despite eight interest rate increases since last March, with food prices a key inflation driver.
The BSE index is down 5.9 per cent year-to-date, making it the worst performer among major markets in Asia.
Top lender State Bank of India jumped 3.3 per cent, while leading lenders ICICI Bank and HDFC Bank firmed 0.7 per cent and 1.4 per cent, respectively.
Paper producers soared after U.S. paper and packaging company International Paper Co said on Tuesday it intended to buy a majority stake in India's third-largest paper company Andhra Pradesh Paper Mills for about $257 million in cash.
"The deal will give a boost to the industry, which was not in focus for a while. It gives a sense we could see more such deals in days to come," said Kejriwal.
Andhra Pradesh Paper jumped 20 percent, while rivals West Coast Paper Mills and Ballarpur Industries gained 17.1 per cent and 16.4 per cent, respectively.
Drug maker Cipla jumped 5.2 per cent, catching up with the underperformance, dealers said. The stock is still down 11.4 per cent in 2011.
Real estate firm DB Realty ended up 18.8 per cent, extending gains for a second day after touching a record low on Tuesday. The stock is still down nearly 40 percent year-to-date.
The 50-share NSE index gained 0.9 per cent to 5,787.65, closing above its 200-day moving average of 5,696 points.-Reuters