Indian shares rose to a record high on 2 February 2007 as investors lapped up telecommunication and cement shares in hopes of continued strong growth in coming months.
The Bombay Stock Exchange’s 30-share Sensex index jumped 137 points, or 1 percent, to 14,404.
The index ranged between 14,293 and 14,463 points during the session.
On the broader National Stock Exchange, the 50-company S&P CNX Nifty index advanced 46 points, or 1.1 percent, to 4,183.
“It is a very good sign because the rise has been accompanied by volumes and participation from everyone,” said Sharmila Joshi, a dealer at Asit Mehta Investment Intermediaries.
Among the gainers were Bharti Airtel Ltd., which surged 5 percent to Rs 771, Reliance Communications Ltd., which gained 3 percent to Rs 491 and Gujarat Ambuja Cements Ltd, which rose 2.5 percent to Rs 143.
The Indian rupee , meanwhile, hit a one-year high as a number of developments this week raised expectations of robust foreign inflows, but traders said suspected central bank intervention pulled it off its peak.
The partially convertible rupee hit a high of 44.05 per dollar in early trade, its strongest since January 31, 2006, according to Reuters data, before ending at 44.11/12, still up from its previous close of 44.17/18.
“The rupee has benefited from a lot of good news this week, and I don’t see this sentiment turning in the near term,” said a dealer at a private bank.
“It’s going to be hard for RBI to stop the rupee from rising to 43.85 by March and 43.50 by June -- despite regular intervention,” he said of the Reserve Bank of India’s suspected buying of dollars through state-run banks.
Sentiment on the rupee was boosted after Standard & Poor’s lifted India’s credit rating to investment grade on Tuesday, and was helped by Wednesday’s interest rate rise by the RBI -- and the prospect of more to come after data on Friday showed inflation had risen back above 6 percent in mid-January.
Further, a rise of nearly 1 percent in the benchmark stock index to a record close on Friday fuelled anticipation amongst traders of a renewed burst of capital flows into Asia’s fourth-largest economy.
Foreign fund investments in a surging stockmarket have helped the rupee appreciate about 6.5 percent since it hit a three-year low in July.
Still, traders remained cautious about selling the dollar after the central bank was again suspected of intervening to check the rupee’s gains.
“The central bank was selling dollars at the 44.10 level, though not very aggressively,” said the chief dealer with a foreign bank.
According to a JP Morgan index , the rupee is overvalued by about 9 percent.
The central bank intervenes to protect exporters’ competitiveness and to curb excess volatility, analysts say.