Mumbai: India’s main index rose to its highest close since 3 April, as cigarette maker ITC, one of the big blue chip gainers this year, recovered from steep recent falls, while Reliance Industries gained on hopes for improving refining margins.
Indian shares have gained mildly for three consecutive sessions, helped in part by hopes more policy reforms from the government will help extend the strong rally seen last month.
A newspaper report the government was considering allowing foreign direct investment in the country’s supermarkets lifted shares in retailers such as Pantaloon and Shopper Stop on Thursday.
The global risk environment should be key in the near-term, according to analysts. Sentiment could improve after China’s central bank cut interest rates late on Thursday, hours before a widely expected monetary policy easing from the European Central Bank later in the day.
“If China is cutting interest rates, that might be reflection of the fact that they are slowing down substantially,” said V.K Vijayakumar, an investment strategist at Geogit BNP Paribas.
“Globally interest rate will be heading south.”.
The 30-share BSE index rose 0.4% to 17,538.67 points, having gained 13% so far this year as of Wednesday’s close, compared with a 5.8% gain in the MSCI Asia-Pacific index excluding Japan.
The broader 50-share NSE index rose 0.5% to 5,327.30 points.
A big chunk of gains in Indian shares have come in June, when the BSE index surged 7.5%. The advances this month, however, have been milder as investors have consolidated some positions.
Indian markets rose on Thursday led by a rally from ITC. Mint’s Lisa Pallavi Barbora walks us through the day’s action.
On Thursday, cigarette maker ITC was among the leading gainers, advancing 1.8% after some investors viewed as excessive a 4.9% retreat in the previous three sessions from its record high of Rs 260.4 hit on Monday.
ITC has been one of the best performing blue chips this year, gaining 22.3% as investors have been attracted by a stock that some see as a defensive consumer play with consistent earnings growth potential.
Reliance Industries rose 0.4%, supported by hopes for better refining margins in second half of 2012 and a recent under-performance in the stock.
Retailers Pantaloon Retail India rose 3% while rival Shopper Stop surged 8% after Economic Times reported the government may allow foreign investors to own majority stakes in domestic supermarkets and department stores after the Presidential elections on 19 July.
Shares in rice producers rallied a day after India allowed the overseas sale of basmati rice without restrictions. Kohinoor Foods shares rose 14.8%, KRBL rose 7.7%, and LT Foods rallied 9.6%.
Shares in Ashok Leyland shares rose 2.6% a day after the company said it would spend Rs 4000 crore to increase capacity in Tamil Nadu, a move that is expected to yield significant tax advantages given the southern India state allows companies to temporarily waive value added taxes.
However, among decliners, Bajaj Auto fell 1.7% as Thursday marks the day when the stock went ex-dividend.
Shares in Oil and Natural Gas Corporation fell 2.2%, hit by profit-taking after gaining 12.5% in June.