Mumbai: India’s main stock index climbed above 15,000 points on Wednesday for the first time in nine months, but was beaten back as investors cashed in profits after a three-month rally.
The 30-share BSE index ended down 0.03%, or 4.01 points, at 14,870.90, after initially rallying more than 1% to 15,045.88 points. The 50-share NSE index rose 0.1% to 4,530.70.
Although investors took profits, the market undercurrent was bullish on brightening signals the global recession was easing and appetite for risk among foreign investors were on the rise.
Energy giant Reliance Industries, which has more than doubled in value since early March, and outsourcer Infosys Technologies were targeted by profit-takers.
Diversified cigarette maker ITC, telecoms firm Reliance Communications and leading vehicle maker Tata Motors bucked the trend and rose.
“The promise of a pro-reforms and stable government without Leftist interference has boosted investor confidence on the possibility of a swifter-than-anticipated economic recovery,” IDFC-SSKI Securities analyst Pathik Gandotra said.
Prime Minister Manmohan Singh’s Congress party-led coalition was re-elected last month for a second five-year term and the government has said it would focus on boosting growth and creating more jobs.
“Multiple positives - strong capital flows, improved corporate confidence and across-the-board reforms -- are expected to lead to better profitability for companies,” Gandotra said.
The benchmark index, which breached 15,000 for the first time since last 8 September, has jumped 85% from a 2009 low in early March, riding a wave of relief the world economic crisis was easing.
The index has risen 54% this year, fuelled by foreign fund investments of more than $6 billion since mid-March, after falling by more than half in 2008 when the funds pulled out about $13 billion from the market.
The renewed foreign interest is forecast to continue as expectations run high for pro-market reforms such as relaxation of foreign investment rules in the insurance and pension sectors, and increased infrastructure spending.
Recent encouraging economic data from around the world is also keeping sentiment up, traders said.
Modest but surprising growth in Australia, a jump in US pending home sales and steadying confidence among consumers added to evidence the world economy, while not rebounding, has come through the worst of the slump.
Gandotra said the market may see some consolidation over the near term as corporate earnings try to catch up with stretched valuations.
But shares are set to rise over an 8-12 month period, he said, adding he favoured financials, infrastructure-related firms and automakers as they would lead the revival in earnings.
Reliance Industries, which has the most weight in the main index, fell 1.5% to Rs2,244.80. No. 2 IT-services firm Infosys shed 2.2% to Rs1,645.90.
Private-sector lender ICICI Bank eased 1.7% to Rs719.70 and government-run State Bank of India, the country’s top lender, ended down 1.9 percent at Rs1,873.20.
State Bank shares have more than doubled in value over the past three months, while ICICI has raced up 172% in the period.
ITC, which also has business interests in consumer goods, hotels and agri-commodities, climbed 5.8% to Rs203. Tata Motors added 3.7% to Rs362, a day after rating agency Moody’s Investors Service changed its outlook on the company to “stable”.
Top telecoms firm Bharti Airtel slid 0.5% to Rs796, a day after South African mobile group MTN’s biggest shareholder said he supports revived merger talks with the Indian firm in principle, but believes there is “room for improvement” on the price.
In the broader section, gainers led losers by more than 2.5 to 1 on relatively heavy volume of 874.2 million shares.