Mumbai: Indian shares snapped a three-day slide and climbed 2.9% on Thursday as investors who had missed out on a six-week rally jumped in to pick up stocks at dips.
Strong Asian peers also underpinned the market after it had wobbled at the start, but traders said the outlook was clouded by political uncertainties and slowing growth concerns.
Energy giant Reliance Industries led the rise, ahead of its quarterly result that showed a lower-than-expected drop after trading ended. Outsourcers Infosys Technologies and Wipro were also among the major gainers.
The 30-share BSE index .BSESN gained 2.93% or 317.45 points, to 11,134.99, after falling as much as 0.5% in early trade.
It was the second highest close this year as 27 stocks advanced in the benchmark, which hovered near its 200-day moving average.
The index, which slumped more than half in 2008, had gained a third over six weeks to last Friday and Thursday’s rebound put it on course to extend the winning streak this week.
“There is so much liquidity in the system,” said Neeraj Dewan, director at Quantum Securities. ”Those who did not participate in the earlier rally are parking their money in shares whenever there is a dip in the market.”
Much of the cash has come from foreign funds who have moved more than $900 million into Indian shares in April.
However, a bleak global economic forecast by the International Monetary Fund and uncertainties linked to month-long national elections in India that ends in mid-May are expected to keep a lid on the market’s rise.
“The market may move sideways in the near term. After yesterday’s low, it is trying to reclaim higher levels,” Jai Bala, a technical analyst at Reliance equities, said.
He forecast the BSE index to move between 10,400 and 11,400 points till the election results are announced. Reliance Industries, which has the biggest weight in the main index, gained 2.7% to Rs1,762.35. After the market closed it posted a 1% drop in March quarter profit, which was above market expectations.
No. 2 software-services firm Infosys gained 5.1% to Rs1,449.85. Third-ranked Wipro jumped 11.1% to Rs312.95, a day after its quarterly result beat forecasts.
In the broader section, gainers led losers 1,447 to 1,059 on relatively moderate volume of 455.4 million shares. The 50-share NSE index .NSEI rose 2.8% to 3,423.70 points.
Asian markets rose after a larger-than-expected profit from Korea’s Hyundai fed optimism the auto sector could be nearing a turnaround and technology shares found strength on the back of buoyant earnings from Apple.
European shares were more subdued in early trading withmajor indexes slightly lower.