Mumbai: Shares extended gains to 2% on Wednesday afternoon, on strong foreign fund interest and firm world markets.
At 2:48pm, the 30-share BSE index was up 2.08% at 20,633.70 points, with all but one component advancing. The 50-share NSE index was up 2.2% at 6,221.95.
Outsourcers led the gains on expectations for strong earnings. Infosys Technologies, the No. 2 software services exporter that releases quarterly result on Friday, climbed 1.3%.
Brokerage CLSA said Infosys would likely upgrade fiscal year 2011 dollar-revenue growth guidance to 23-25%, and added it expected upbeat comments on the industry outlook.
At 10:42am, the 30-share BSE index was up 1.11% at 20,425.75 points, with 29 of its components advancing. The 50-share NSE index was up 1.1% at 6,154.60 points.The 50-share NSE index was up 1.1% at 6,154.60 points.
The benchmark is up nearly 17% in the year to date, and is around 800 points away from an all-time high.
“The possibility of a small correction is not ruled out at levels like these, but there is no fear of a major downside right now,” said Rakesh Rawal, head of private wealth management at brokerage Anand Rathi.
Foreign funds have bought shares worth a record $21.7 billion so far in 2010, with more than a third of the inflow happening since the start of September.
Data on Tuesday showed factory output growth in August slowed to single digits, but analysts were upbeat about the outlook for the full year.
The stocks rally has been driven mainly by foreign funds, while domestic institutions have largely been sellers or on the sidelines.
Rawal said a correction in prices could make stocks more attractive to investors.
Tata Consultancy Services and Wipro, the No. 1 and No. 3 software services exporters were up 1.9 and 1.3% respectively.
“IT spend at Indian techs top clients is on the rise even as rising deal pipelines, acceleration in discretionary spend and increasing deal sizes indicates greater confidence at client end,” CLSA said in a note this week. “Infosys and TCS remain our preferred picks to play this top-line upswing,” it said.
Energy major Reliance Industries rose 1% in an attempt to catch up with the rally in the broader market.
The stock, which weighs the most on the Sensex, has been an underperformer due to lack of near-term positives. It is down 2.3% in the year to date.
In the broader market, gainers led losers in a ratio of 2.7:1 on volume of 139 million shares.
Elsewhere, the MSCI’s measure of Asian markets other than Japan was up 0.6%, while Japan’s Nikkei rose 0.3%.
Metal makers such as Sterlite Industries and Hindalco rallied 1% and 1.6% respectively on firm metal prices.
Copper prices in London and New York touched 27-month highs, while Shanghai zinc futures hit their highest since April, buoyed by a fall in the dollar and expectations of US stimulus.
Water treatment firm VA Tech Wabag was trading at Rs1,740, up 32.8% from its issue price of Rs1,310. It had listed at Rs1,662.