Business | Markets
Indian shares rally 5.5% as US moves to tackle credit crisis
Indian shares rebounded 5.5 per cent on Friday their biggest one-day rise in two months, after hopes soared the US government would come out with a comprehensive plan to end the financial sector turmoil.
- Reuters
- Published: 00:24 September 20, 2008
Mumbai: Indian shares rebounded 5.5 per cent on Friday their biggest one-day rise in two months, after hopes soared the US government would come out with a comprehensive plan to end the financial sector turmoil.
The rally helped the benchmark BSE index to wipe out losses over the tumultuous week and notch a gain of 0.3 per cent, its first rise in three weeks.
Beaten-down banks and export-driven outsourcers led the rise as investors chased bargains after fin-ancial authorities in the United States and other countries moved to calm credit problems.
"It was a typical market reaction. After the panic sell-off , the bounce came back with almost the same force," R K Gupta, managing director of Taurus Mutual Fund, said.
He said the manner in which the gains were sustained through the day would give confidence for next week.
The 30-share benchmark index rose 5.46 per cent, or 726.72 points, to 14,042.32, its highest close since September 11, with all components rising. It rose as much as 5.9 per cent during trade.
No. 2 lender ICICI Bank climbed 9.1 per cent to Rs628.10, its biggest one-day percentage rise since July 23, after its chief executive said the bank was extremely healthy and had ample capital.
The stock had dropped nearly 12 per cent in the previous four sessions, largely after the bank said it had an exposure of $81 million to senior bonds of collapsed Lehman Brothers.
Asian stocks ended on a high and European shares soared yesterday on news US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke intend to work through the weekend on a plan to deal with mortgage-related assets.
Outsourcers, which count US financial services firms among their top clients, rose on hopes a solution to the financial crisis will help them protect their billings.
Bellwether Infosys Technologies rose 6.6 per cent to Rs1,623.85, its best gain in almost six months. Leader Tata Consultancy Services firmed 6.4 per cent to Rs766.
Private-sector lender HDFC Bank rose 6.3 per cent to Rs1,299.20, its highest close in almost two weeks and top mortgage lender Housing Development Finance Corp gained 8.3 per cent to Rs2,308.45. The sector index advanced 5 per cent.
Top listed firm Reliance Industries added 6.2 per cent to Rs2,051.85, its biggest gain in eight months, after the Business Standard daily said the company was likely to invest Rs100 billion ($2.2 billion) more for gas production.
Videocon Industries rose 5.8 per cent to Rs229.95 after it said its joint venture firm had completed acquisition of the Brazilian oil assets of Encana Corp.
However, traders said foreign fund flows would hold the trump card. The funds have pulled out $1.7 billion this month, with the outflow accelerating after Lehman collapsed rattling investor confidence.
The BSE index has lost nearly 31 per cent this year on foreign withdrawals of $9 billion. In the broader market, gainers overwhelmed losers by more than two to one on volume of 301.8 million shares. The 50-share NSE index rose 5.1 per cent to 4,245.25.
Elsewhere in the region, Karachi's 100-share index was little changed at 9,200.60, while Colombo's All-share index rose 1.3 per cent to 2,250.32.
More from Markets
More from Business
Business Editor's choice
-
‘Wrong Way' Krugman
The source of our economic malfunction lies with government-mandated bank regulations
-
Greek exit could make Eurozone stronger
Departure will show limits of bailouts and allow remaining members to act much more like a unit
-
UAE upholds values of free trade
Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular
