Mumbai: Indian shares dropped slightly at noon from 0.7% rise on Wednesday morning, with banks and autos amongst major gainers as this week’s better-than-expected growth data and strong November auto sales figures underpinned bullish market sentment.
Positive global markets, as the world shrugged off worries about Dubai debt, also supported the move. “Dubai did not have the intensity to put the world into a doomsday scenario again,” said Rakesh Rawal, head of private wealth management at Anand Rathi Financial Services.
Banks gained the most as investors upgraded their outlook after Monday’s unexpectedly strong 7.9% annual rise inGDP in the September quarter.
“In a growing economy, growth for banking sector is inevitable. Investors are placing their bets on the long-term outlook,” said Rawal.
Leading banks State Bank of India and ICICI Bank rose 1.7% and 2.5% respectively.
At 1:42pm, the 30-share BSE Index was up 0.3% at 17252.93, with 17 components gaining. The 50-share NSE index was up 0.5% at 5,144.10.
Shortly after midday the market had turned negative for a brief period.
The benchmark has rallied nearly 80% in 2009, driven by foreign fund buying of more than $15 billion of equities.
“Sensex should grow by 15 percent in 2010, tracking EPS growth in companies,” said Rawal. “Also, the extent of negativities in the world markets may come off in 2010. If that happens, it could help the Sensex grow further. It can grow by ... maybe even 25%.”
Top vehicles maker Tata Motors touched a 18-month high of Rs730, after it said its sales in November rose 65%. Other auto stocks such as Maruti Suzuki and Bajaj Auto up 1.7% and 2.2% respectively after reporting strong November sales.
Top engineering and construction firm Larsen & Toubro fell 0.7% to Rs1,617.90, after the government rejected its proposed tie-up with Europe’s EADS for defence equipment production.
In the broader market, gainers were more than double the number of losers, on volume of 144 million shares.