Business | Markets
Indian shares reverse early losses as uncertainty clears
Indian shares reversed sharp early falls to end up 2.1 per cent on Tuesday, as assurances from ministers and the market regulator lifted sentiment, while higher US futures and a recovery in some Asian markets weighed in.
- Reuters
- Published: 00:02 October 1, 2008
New Delhi: Indian shares reversed sharp early falls to end up 2.1 per cent on Tuesday, as assurances from ministers and the market regulator lifted sentiment, while higher US futures and a recovery in some Asian markets weighed in.
The benchmark BSE index fell 11.7 per cent in September, but posted its smallest quarterly loss in 2008 to be down just 4.5 per cent, compared with a drop of almost 14 per cent in the June quarter and nearly 23 per cent fall in the March quarter.
ICICI Bank, India's No 2 lender, closed 8.4 per cent higher yesterday, rebounding from a more than two-year low, after the central bank said ICICI had sufficient liquidity to meet the needs of its depositors and that the bank and its subsidiaries abroad were well capitalised.
US stock index futures rose strongly and European shares ran up gains following a recovery in some Asian markets such as Hong Kong and Seoul.
Traders were betting the US Congress would eventually pass the $700 billion bailout package for its troubled financial sector defeated on Monday.
Strong recovery
The 30-share BSE index closed 264.68 points up at 12,860.43, with 20 components ending in positive territory. It had fallen as much as 3.5 per cent to its lowest in two years in early trade.
"I think it was mainly because of the strength in Asian markets, the amount of selling which was expected did not come," said I.V. Subramaniam, director at Quantum Asset Management.
Official assurances
Indian officials also moved to soothe jittery markets saying the widening global financial crisis would have only the marginal impact on the real economy.
"It may be assuring for some people, though we were never worried. We like Indian valuations. Some businesses may get hurt due to the credit crisis, but we feel there are many companies that will be able to manage," Subramaniam said.
The benchmark index is down about 18 per cent in the financial year that began on April 1 and off about 37 per cent since end-2007.
ICICI Bank rose Rs41.55 to 534.85, recovering from the day's trough of Rs458 that was its lowest since June 2006. Larger rival State Bank of India gained 4.3 per cent and top mortgage lender HDFC added 5.3 per cent.
Investors also picked up battered down shares in fundamentally solid firms such as Bharti Airtel and Bharat Heavy Electricals, which rose more than five per cent each, while infrastructure play Larsen & Toubro gained 4.2 per cent.
"Nobody knows what's going to happen tomorrow. But as the Asian markets recovered and Dow futures are up, shorts had to be covered," said Gajendra Nagpal, CEO at Unicon Financial.
"And it is obvious that the first round of buying would come in these India plays."
Traders said some domestic funds were buying to dress up their quarterly closings.
But in the broader market, 1,326 losers were ahead of 1,283 gainers on volume of about 290 million shares.
The 50-share NSE index gained 1.85 per cent to 3,921.20, having fallen as low as 3,715.05.
State-run oil refiners Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum Corp rose more than five per cent each on hopes of a lower subsidy burden.
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