In­dian shares at 2-½ month clos­ing high

The Financial Daily - - MONEY & FOREX -

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

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