Mumbai: Indian shares rose 1.5% on Friday as investors hunted bargains on hopes poor rainfall would not hurt company earnings as much as expected after the market dropped 5.7% in almost three weeks.
Private-sector lender ICICI Bank, energy giant Reliance Industries and IT-services exporter Infosys Technologies led the gains.
Bharti Airtel climbed 2.9% to Rs411.50 after its chairman said in a media interview the telecoms firm was not looking to sweeten its offer to buy a stake in South Africa’s MTN, even as MTN shareholders have said they want a better price.
Motorcycle maker Hero Honda, which climbed 4.8% to Rs1,480.55, and top utility vehicle maker Mahindra & Mahindra that advanced 3.6% to Rs801.75 were the other major gainers.
“People have started thinking that the monsoon, though highly deficient, may not have a very significant impact,” said Jayesh Shroff, who helps manage $1 billion in equity at SBI Mutual Fund.
The 30-share BSE index ended up 1.52%, or 228.51 points, at 15,240.83, with 29 stocks advancing, after falling as much as 1.2% during trade.
It lost 1.1% on the week, weighed down by a 4.1% fall on Monday.
“In the near term, the stockmarkets would not be able to escape the negative sentimental impact that arises from the likely repercussions a highly deficient monsoon may have on India’s GDP,” Angel Broking head of research Hitesh Agrawal said.
“But if we consider corporate India’s annual net sales and net profit growth over the last decade, it is evident that the impact of poor monsoons on corporate profitability is not prominent.”
Monsoon rains in India during the past week increased to the highest in a month but the main soybean region saw weak rainfall and reservoirs fill up at a much slower rate than normal, putting at risk power supply and winter irrigation.
The BSE index has fallen 2.7% this month, hurt by worries about the weak monsoon, high valuations and looming inflation.
Fears that stocks worldwide have run ahead of fundamentals have risen recently in the wake of a slew of downbeat data from across the world.
The number of US workers filing new claims for jobless benefits last week unexpectedly rose, but factory activity in the US mid-Atlantic region turned positive in August as a jump in new orders broke a 10-month streak of contraction.
“The market is going through choppy times, and this could continue for a while,” SBI Mutual Fund’s Shroff said. Some analysts say ample liquidity flowing into the emerging markets will support stocks in the near term as investors look to buy on dips.
ICICI Bank rose 3.6% to Rs745.65,while no. 2 outsourcer Infosys gained 1.8% to Rs2,028.50.
Reliance Industries, India’s top listed firm with the most weight in the main index, added 1.6 percent to Rs1,928.65. In the broader market, gainers led losers by almost 2 to 1 on below-average volume of 382.2 million shares.
The 50-share NSE index rose 1.7% to 4,528.80.
Asian shares were lower on Friday, with Japan’s Nikkei falling 1.4%, while MSCI’s measure of other Asian markets was down 0.5%.