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Midsession: Markets gain over 4%, still rallying on UPA win

Midsession: Markets gain over 4%, still rallying on UPA win
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First Published: Tue, May 19 2009. 02 43 PM IST
Updated: Tue, May 19 2009. 02 43 PM IST
Mumbai: Indian shares extended their rise to more than 4% on Tuesday afternoon, a day after the market surged over 17% on hopes a new stable government will push for privatisations and infrastructure spending reforms.
At 1:15pm, the 30-share BSE index was up 4.3% at 14,896.45 points, with 20 stocks gaining.
The 50-share NSE index was up 3.9% at 4,491.95.
Markets were trading 2% higher on Tuesday, but the market was choppy after a 17% surge in the previous session following a comfortable victory for the ruling coalition triggered profit taking.
The strong win is expected to enable the government to push economic reforms such as privatisations and freer foreign investment rules to boost slowing growth, but the biggest one-day surge in almost two decades on Monday was seen as overdone.
Export-led IT sector, which include outsourcers such as Infosys Technologies and Wipro, fell as a jump in the rupee’s value against the dollar would affect their profitability.
Government-run State Bank of India and explorer ONGC rose.
By 12:03pm, the 30-share BSE index was up 2.1% at 14,586.98 points, after starting up 3.3% and then falling as much as 3.1% and the 50-share NSE index was up 1.2% at 4,375.50.
“This is very healthy for the market. The market should never see one-way traffic,” Amitabh Chakraborty, president of equities at Religare Securities, said.
Twenty stocks advanced while in the broader section, gainers led losers 2 to 1 on heavy volume of 351.1 million shares.
On Monday, trading was restricted to just a few seconds after the jump triggered circuit breakers and shut down the market. Volume was paltry at about 13 million shares.
Leading engineering and construction firm Larsen & Toubro rose 12.5% to Rs1,392.20, taking gains to 47% over three days in anticipation of higher spending on infrastructure.
The benchmark index has gained a quarter of its value this month, while MSCI’s measure of Asian market excluding Japan has climbed nearly 7.5% in the same period through Monday.
Even though this raised concerns the market may have become overbought, analysts predicted a steady rise over the long term.
Foreign funds, which have pumped about $4 billion into the Indian market since mid-March, will be encouraged to invest more with a stable government that is not shackled by former allies such as the communists, analysts said.
“By the second half of the year, GDP figures will be revised upwards. We will see upgrades from rating agencies and company earnings expectations will go up as they are linked to the economy,” Chakraborty said.
Top outsourcer Tata Consultancy Services shed 5% to Rs694.95, while No. 2 player Infosys eased 9.7% to Rs1,597.80.
IT-services firms get most of their revenue in US dollars and a 3.2% surge in the rupee on Monday can hurt their profit margins.
Energy giant Reliance Industries, which has the most weight in the main index, fell 1.8% to Rs2,316.50 after soaring 20% on Monday.
Leading lender State Bank of India gained 10% to Rs1,736.30, while ONGC climbed 5.7% to Rs996.80.
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First Published: Tue, May 19 2009. 02 43 PM IST
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