Mumbai: Indian shares were the best performers in Asia on Thursday rallying nearly 2%, as robust foreign demand for a $3.5 billion IPO by Coal India reaffirmed strong risk appetite.
With the largest-ever Indian IPO closing after heavy bidding, traders expect investors to shift their focus to the secondary market in the run up to Diwali, the festival of lights in early November, that also marks the new year for the trading community.
Energy major Reliance Industries topped the gainers, climbing 2.9% in its best show in five weeks, after being a laggard for the year.
Foreigners have been pouring money into emerging markets such as India in the hope of better returns than the slowdown-hit developed world, and analysts expect the inflow to maintain momentum.
“The superb response for Coal India and the fact that it sailed smoothly without causing much jitters in the market has led to expectations that there is enough appetite,” said Ambareesh Baliga, vice-president of Karvy Stock Broking. The four-day Coal India sale closed today.
On Wednesday, the last day for institutional investors, the offering was covered nearly 12 times with most bids at the high end of Rs225 to 245 per share range, translating into demand for roughly $40 billion.
The 30-share BSE index rose 1.95%, or 388.43 points, to 20,260.58 after a subdued run this week. Twenty-nine of its components advanced.
The benchmark is up 16% so far this year, thanks to foreign equity inflows of a record $23.6 billion in the period.
In comparison, its peers such as Brazil’s Bovespa and Russia’s RTS index have gained 2.6% and 9.5% respectively, while China’s Shanghai Composite Index has shed nearly 9%.
Financials climbed as investors bet another possible rate hike at the central bank’s policy review on 2 November was unlikely to dent demand for loans in the fast-growing economy.
Top lender State Bank of India rose 3.3%, while rivals ICICI Bank and HDFC Bank firmed 1.5% and 1.2% respectively.
Tata Consultancy Services, India’s largest outsourcer that is expected to announce a 23% rise in quarterly profit after market hours, gained 2%. Its peers Infosys Technologies and Wipro rose 0.5% and 1.5% respectively.
Bajaj Auto erased most of a 1.5% early rise and ended up 0.3%, after Bank of America-Merrill Lynch cut the No. 2 motorcycle maker to underperform from neutral.
State-run Power Grid Corp firmed 1.3% to Rs105.65 after its chairman and managing director said late on Wednesday its follow-on public offer to raise up to $1.9 billion would hit the market on 9 November.
According to provisional data, advancing shares outnumbered declining ones in the ratio of 1.9:1 in the broader market on moderate volume of 416 million shares.
The 50-share NSE index rose 2% to 6,101.50.
Amongst the broader indexes, the MSCI’s all-country world index was up 0.2% by 3:48pm, while the more volatile MSCI’s emerging markets index firmed 0.6%.
Canara Bank jumped 7.1% to Rs703.55, after Bank of America-Merrill Lynch upgraded the stock to buy from underperform and RBS raised the stock to buy from hold.
Zensar Technologies fell 3.2% to Rs158.75, as the software services firm said its July-September net dropped 27%.
Allahabad Bank climbed 4.2% to Rs240.85 as the state-run lender posted a forecast-beating 20.7% rise in its September quarter net profit.