Mumbai: Indian shares closed Wednesday 1.2% higher on stock-specific buying, supported by firm Asian equities, but dealers said the rally did not hold much conviction due to lack of any immediate domestic triggers.
The 30-share BSE index closed 1.15% or 208.27 points higher at 18,257.12 points, with 22 of its components closing in the green.
“There is not much conviction. People are picking up stocks which did not participate in the rally recently or where they are seeing better value,” said Prakash Diwan, head of institutional business at Networth Stock Broking.
“At the same time, they are booking profits in select stocks, The market should hover in a narrow range until the end of this month.”
Lenders gained after a senior policy adviser told Reuters on Tuesday headline inflation had peaked and would ease faster from September as the base effect kicks in.
Private lender HDFC Bank rose as much as 3.6% to a record high of Rs2,200. It later closed 3.1% higher at Rs2,188.45. “The fundamentals of HDFC Bank are very strong. It is getting to be one of the top picks amongst large-cap stocks in the sector,” Diwan said.
Mortgage lender Housing Development Finance Corp firmed 3.1% while leading private lender ICICI Bank climbed 1%. Top lender State Bank of India bucked the trend and slipped 0.1%. Export-oriented outsourcers rose as robust profits from US retailing giants boosted confidence in the corporate outlook in the world’s largest economy.
Top software firm Tata Consultancy Services, rivals Infosys Technologies and Wipro rose between 1.8% to 2.1%.
Cigarette-to-hotel business ITC rose as much as 2.4% to Rs163.25, its highest in at least 20 years.
“As seen in Q1 FY11, cigarettes’ profitability remains largely unaffected due to strong resilience of cigarettes and ITC’s huge market share,” Edelweiss said in a note earlier this week.
“Also, ITC is gaining traction in non-cigarette businesses making it a well diversified growth company,” the brokerage said, adding it has a buy rating on the stock.
Advancing shares outnumbered declining ones in the ratio of 1.3:1, on a relatively better volume of 472 million shares.
Foreign funds have pumped in $11.7 billion in Indian equities helping the benchmark BSE index add 4.5% so far in 2010.
The 50-share NSE index rose 1.2% to 5,479.15 points.
Among the broader indices, MSCI’s measure of world markets and more volatile emerging markets index were up 0.1% each at 4:13pm..
Hair oil producer Bajaj Corp listed at Rs780, 18.2% higher from its issue price of Rs660. It closed at Rs758.25.
Suzlon Energy tumbled 3.3% to Rs49.50 as JPMorgan downgraded the wind turbine maker to underweight from neutral.
Indiabulls Financial Services rose 0.6% to Rs154.25 after the Business Standard reported that Anil Dhirubhai Ambani Group was in talks to acquire a 26% stake in Indian Commodity Exchange from the firm.