Business | Markets
Indian shares jump 3.6% on positive global trends
Indian shares closed 3.6 per cent higher yesterday, buoyed by strong world stocks after oil prices fell and recouping most of the losses triggered by unexpectedly harsh central bank rate increases the day before.
- Reuters
- Published: 00:02 July 31, 2008
New Delhi: Indian shares closed 3.6 per cent higher yesterday, buoyed by strong world stocks after oil prices fell and recouping most of the losses triggered by unexpectedly harsh central bank rate increases the day before.
Top private firm Reliance Industries rose 3.7 per cent while mortgage lender Housing Development Finance Corp jumped eight per cent, spurring the market higher.
No. 2 lender ICICI Bank also gained 4.6 per cent. These three stocks account for about 28 per cent of the main index.
Oil's fall to a 12-week low below $122 a barrel, a major slide from its record above $147 hit two and a half weeks ago, eased worries and boosted sentiment in Asia and Europe.
"We responded positively to global cues and more importantly the fall in oil, which is the root cause of global inflation," said K.K. Mital, head of portfolio management services at Globe Capital.
Tightening
"Whatever tightening we are seeing is all because of inflation and any cooling off in oil and other commodity prices would definitely help the markets."
The 30-share main BSE index closed up 3.59 per cent, or 495.67 points, at 14,287.21, with all but two components rising.
On Tuesday, the index had fallen 3.9 per cent to its lowest close in more than a week after the the Reserve Bank of India raised its key lending rate for the third time in two months to tame double-digit inflation. It also hiked banks' reserve requirements.
Mital said the market was taking comfort from June quarter corporate earnings, which were mostly in line with forecasts.
Banking stocks, which had been battered after the rate rise, found some buyers yesterday. HDFC Bank rose 6.2 per cent to Rs1,092.500 and top lender State Bank of India firmed five per cent to Rs1,386.65.
Banking rebound
The BSE bank index rose 5.2 per cent after an 8.3 per cent fall on Tuesday.
Tata Steel, which reports quarterly results tomorrow, rose 7.8 per cent to Rs630.05. Profit at its Indian operation are forecast to have risen 4.9 per cent in the June quarter, a Reuters poll showed.
Software firms Infosys and Wipro gained more than four per cent each, while Tata Consultancy and Satyam rose more than three per cent.
In the broader market, 1,778 gainers outpaced 857 losers on volume of 355.9 million shares. The 50-share NSE index was up 2.95 per cent at 4,313.55.
Traders said some short-covering ahead of the monthly derivatives expiry tomorrow also helped the rise.
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