Mumbai: Shares were up 1% on Wednesday, mirroring strong gains in their Asian peers, with cooling oil prices providing a further boost. Financials led the gains.
Paper producers soared after US 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 Arun Kejriwal, director of research firm KRIS.
Andhra Pradesh Paper and rival West Coast Paper Mills jumped 20% each and Ballarpur Industries gained 14.8%.
At 11:40am, the 30-share BSE index was up 0.95% at 19,303.14 points, with 28 components advancing. It rose more than 1% earlier.
In the broader market, gainers thrashed losers in a ratio of 3:1 in a volume of 144 million shares on BSE.
The 50-share NSE index was up nearly 1% at 5,790.90, and was trading above its 200-day moving average of 5,696 points.
“It is a liquidity-driven rally based in technicals. Though, fundamentally nothing has changed. We are in an over-bullish mode,” said Prakash Diwan, head of institutional business at Networth Stock Broking.
“I would not like to believe that we are at the start of a big bull run.”
The BSE main index is still down nearly 6% this year, as foreign funds sold a net of $1.2 billion from Indian stocks.
A drop in oil prices helped sentiment in a market that is already worried about sticky inflation.
Financials were boosted due to optimism over loan demand as investors expect the country’s economic growth to continue at a fast pace.
Leading lenders State Bank of India , ICICI Bank and HDFC Bank firmed between 0.9% and 1.1%.
Real estate firm DB Realty soared as much as 18.6%, extending gains for a second day after touching a record low on Tuesday. The stock is still down more than 40% year-to-date.
The MSCI’s measure of Asian markets other than Japan was up 1.6% , while Japan’s Nikkei rose 2.1%.
State-run oil marketing companies rallied after Brent fell by 0.3% to below $115 on indications that higher fuel prices were weighing on consumer confidence in top user the United States, where crude inventories rose more than expected last week.
Indian Oil Corp , Bharat Petroleum Corp and Hindustan Petroleum Corp gained between 2% and 3.2%.
PTC India Financial Services listed at Rs 28 on the BSE, at par with its issue price. It later declined and was trading 13% lower at Rs 24.35.
Tata Teleservices Maharashtra was up nearly 7% at Rs 16.28 after sources said parent Tata Teleservices , India’s No.4 mobile carrier, plans to raise Rs 3000 crore through a rights share issue that will be subscribed by major shareholders, including Japan’s NTT DoCoMo .