Bangalore: Shares climbed 0.7% on Thursday, extending gains to a fourth day, on hopes robust economic growth would boost corporate earnings. Firm global markets also helped the upbeat sentiment.
Financials rallied after the Indian cabinet decided to pump an additional Rs 6000 crore ($1.3 billion) into state-run banks to improve their capital adequacy and to lift the government’s stake in them.
“The bounce back over the past few sessions has happened because of a lot of stocks being over sold. We are seeing a lot of follow-on buying happening,” said Neeraj Dewan, director at Quantum Securities.
The 30-share BSE index closed up 142.7 points, at 19,992.7, with 17 components gaining ground.
The benchmark had fallen 2.6% in November, its biggest monthly loss since May, battered by a series of scandals that most hurt stocks in financial, telecom and real estate sectors.
The scandals - which include issue of telecom licenses at low prices and a bribes-for-loans scam that saw eight financial industry executives arrested last week - will continue to be an overhang for the markets in the near term, analysts said.
The market is, however, up 14.5% so far this year bolstered by overseas portfolio investments worth about $29 billion.
The banking sector index firmed 1.2%, also supported by hopes a fast-growing economy and pickup in industrial activity would boost demand for loans. ICICI Bank and HDFC Bank gained 2 and 1.2% respectively.
“India is a compelling story for foreign investors as it is looking at a 9% economic growth. Consumption is growing, rural economy is also buoyant,” said Deven Choksey, managing director of KR Choksey.
On Wednesday, a survey showed the manufacturing sector in Asia’s third-largest economy expanded at its fastest pace in six months in November on the back of robust new business and a sharp rise in export orders.
Official data earlier showed the Indian economy grew a better-than- expected 8.9% in the September quarter, boosted by robust farm output and manufacturing..
Explorer Oil and Natural Gas Corp (ONGC) trimmed gains to 1.9% at Rs 1,313.05 by close, after rallying as much as 5.1% early after the cabinet approved the state-run firm’s proposal for a stock split and a one-for-one bonus issue..
Wipro, the No. 3 outsourcer, ended up 2.6% after the company said its billionaire chairman Azim Premji would transfer 8.7% holding to an irrevocable trust. Dealers said this would likely help improve liquidity in the stock.
Metal counters Tata Steel, Hindalco and Sterlite Industries rose 1.4 to 3.1%, tracking bullish metal prices in the world markets.
Hero Honda fell 7.3% after the Business Standard reported the motorcycle maker has agreed to increase its royalty payments to Honda Motor Co to 8% of annual sales in return for a technology makeover and a stake sale by the Japanese firm in the venture..
In the broader market, gainers outpaced losers by a ratio of 1.8-to-1 on volume of about 415 million shares.
The broader 50-share NSE index gained 0.9% to 6,011.7.
Elsewhere, the FTSEurofirst 300 was up 0.5% at 4:00pm, while the MSCI’s measure of Asian markets other than Japan added 1.6%.
J.B. Chemicals & Pharmaceuticals rose 7.9% to Rs 135.55 after the company said it won US regulatory approval for diclofenace sodium tablets.
Mastek Ltd closed up 13.6% at Rs 208.95 on news the software services firm had acquired the assets of SEG Software for an undisclosed amount.
Dewan Housing Finance firmed 7.2% after it said the company, along with its founders Wadhawan Housing and Caledonia Investments, had acquired Deutsche Postbank Home Finance for Rs 1079 crore.